Analysts 'cautiously optimistic' over modest first-half PR company results

Figures show PR is lagging behind other marketing sectors but analysts say picture is more complex.

Results: Chime, Huntsworth and WPP
Results: Chime, Huntsworth and WPP

Three of the UK's major listed PR players announced their 2011 first-half results on consecutive days last week, all suggesting that PR is lagging behind the recovery seen in other marketing sectors.

Chime Communications, owner of Bell Pottinger, saw a ten per cent increase in firsthalf income. But this revenue growth was driven by the strong performance of its advertising and sports marketing businesses, while PR revenues dropped by five per cent.

Huntsworth's growth in revenues underperformed market expectations, with like-for-like revenues increasing by 1.6 per cent, while pre-tax profit fell by 20 per cent.

Finally, WPP saw like-for-like first-half revenue growth in its global PR division of five per cent, but lagging behind advertising, with like-for-like revenue growth of 8.1 per cent.

Market analysts, however, pointed out that the three companies were at different stages in their evolution and drawing broad-brush conclusions about the PR industry was problematic.

Chime's share price has dropped almost 20 per cent since June, but this and its declining PR revenue were largely driven by a slowdown in its geopolitical work in the Middle East and declining revenue from the US government (see below).

Richard Nunn, an analyst at Charles Stanley, noted that Chime had been 'over-sold' due to these geopolitical factors and that its fundamentals remained strong.

'Overall, from a PR perspective, there are positive trends,' he said. 'PR spend still seems relatively buoyant, so there are reasons to remain cautiously optimistic'.

Chime predicts that its growing sports marketing offering will make up almost 50 per cent of its business during the next three or four years. Lord Bell disagreed that this indicated a change of emphasis away from PR, but acknowledged 2011 had been a 'difficult year' across the PR industry.

Roddy Davidson, an analyst at Altium, said Huntsworth was 'pursuing the right strategy' and that the market was generally giving the group the 'benefit of the doubt' that this revenue would be reflected in the second half results.

He said of the PR industry more generally: 'PR has had a pretty good downturn and there is certainly recognition that comms is becoming an increasingly effective way to reach specific customers and stakeholders.'


  • Huntsworth Revenue up to £88.1m, compared with £87m during the same period last year.
  • Chime Communications Overall income rose to £78.4m from £71.1m. PR revenue fell from £34.4m to £32.6m.
  • WPP Headline revenue growth of 6.1 per cent, to £4.7bn. Its PR business grew five per cent on a like-for-like basis.
  • Publicis Groupe Global PR revenues climbed by five per cent year-on-year during Q2.
  • Interpublic Group Organic growth for PR division of 9.5 per cent in first half.
  • Omnicom 7.1 per cent increase in global PR revenue for Q2.


5% The drop in Chime's operating income from its PR division

18.8% The fall in Chime's share price since June

46% The proportion of Huntsworth revenue from outside the UK

9.1% The proportion of WPP's global revenue from PR

Source: First-half results

Focus on Chime: Lord Bell's firm hit by loss of key US government contracts amid Middle East turmoil.

The turmoil in the Middle East hit Chime Communications' PR revenues during the first half of the year, but the group also warned of declining revenue from its key US government contracts.

Chime, which until earlier this year had represented the Economic Development Board of Bahrain, said it had been 'affected by the slowdown in geopolitical work as a result of the turmoil in the Middle East'.

Notably, Bell Pottinger won a wide-ranging comms mandate from the US State Department to support comms in Iraq during 2004.

It is thought that the agency remains actively engaged on comms projects in Iraq and Afghanistan on work that has commanded multi-million-pound annual fees.

However, Chime stated: 'The US government has had to deal with a large budget deficit and is already committed to reducing troop activities overseas.

'Its comms plans in areas of conflict remain uncertain and we have already seen a reduction in income from this client and expect this to continue.'

Lord Bell declined to comment on specific clients but told PRWeek that the company would continue generating revenues in this area as it had 'a specialist skill in handling comms work in conflict situations'.

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