Huntsworth reorganizes business units; PR revenues down 9.3%

LONDON: Huntsworth restructured the company this week, slimming 26 brands down to four, three of which are PR firms: Huntsworth Health (30% of group revenues), Red, Citigate, and Grayling.

LONDON: Huntsworth restructured the company this week, slimming 26 brands down to four, three of which are PR firms: Huntsworth Health (30% of group revenues), Red, Citigate, and Grayling. The company said it did so in order to compete and win "large multinational mandates that will carry the group into the next phase of its growth." The firm noted in its earnings report, released August 27, that its companies were winning international work with individual brands but, with the exception of Huntsworth Health, not yet winning the global pieces it wants to.

Initially the company had planned a gradual, two to three year plan to carry out the rebranding, but the economic downturn sped up the process, which is being implemented now.

Grayling, which has both a US and UK presence, will merge with Trimedia and Mmd, among other firms. It will now make up 44% of Huntsworth's revenues. The company will also look to expand its financial PR firm Citigate into key global markets. Red, which has both a UK and smaller US presence, is also expected to expand its brand globally. It makes up 8% of Huntsworth revenues, while Citigate produces 18%.

The reorganization has been in the works for a while, said Huntsworth COO Sally Withey, who told PRWeek that the company went through a buy-and-build stage, and had been slowly integrating the firms into various businesses.

"Our group had 36 brands and for a client to find their way around the group is almost impossible, so what we've planned to do and what we've already started was a slow evolutionary journey to try to reduce this number of brands," she said. "What we really want to do is go after global revenues, because that is where the big ticket items are."

Huntsworth Health will stay on as its own division, and the Red group will stay relatively untouched, Withey said.

Citigate will also go through some changes, most notably breaking off to its own company also owned by Huntsworth, with its own yet-to-be-named CEO.

"We are going to target the likes of Financial Dynamics and Brunswick and take the brand we've already got and capitalize on that," Withey said.

Anne McBride, the chairman of Grayling investor relations, told PRWeek that Grayling's revenues will now come to about £70 million ($113 million), making it "the third largest not owned by an advertising agency, because we don't have advertising in the Huntsworth group."

"This organization rationalizes and streamlines the business and aligns the business so we really have a global presence in each of the different markets," she said. "From a financial and investor perspective, it's a very sound decision and… it's certainly not going to change the New York office or any of the US operations."

Maryelle Royle, president of Dorland Global Public Relations, which is part of Huntsworth Health, said that the firm has not been affected by any changes at this time.

“Huntsworth Health will continue to be the overarching umbrella for our family of agencies,” she said. “This is the first step in some rebranding initiatives that will see sub-brand agencies under Huntsworth Health, that will be specific to specialty areas.”

She declined to provide additional information about any rebranding efforts for Dorland Global.

For the first half of the year, the holding agency reported that revenues for its PR group, which makes up 71% of the company's overall revenues, were $88 million, down 9.3% from $97 million for the first half of 2008. Organic growth for the group was down 8.4%.

Operating profit for the PR group, which includes Grayling, Red, and Citigate, was $17.7 million, down from $20.9 million for the first six months of 2008. Overall profit for the period was $379,000, down from $1.94 million during the first six months of 2008.

The holding company's overall revenues were $124 million, a drop of about 5%. Revenue in the US was $34.4 million, up 3.8% from $33.15 million for the first half of 2008.

Costs for the restructing so far were $8.6 million, including severance for reducing senior staff as a result of the consolidation and property merging as it weeds out unprofitable divisions, too.

Several acquisitions also took place, including Momentum in February, and Connecting Point in April. Since June 30, the holding company has acquired Tonic and Sund.

Huntsworth is also working to build up its board, adding two non-executive directors: John Farrell of Publicis in July, and Michael Birkin, of Omnicom, announced today.

Updated August 28, 11:11am

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