Creston: client troubles to hit full-year results despite improved third quarter

Creston says it expects to report slightly lower pre-tax profit and flat like-for-like revenue growth in its full year despite an improved performance in Q3, citing project delays and cuts from clients, partially linked to "uncertainty" in the global economy.

Creston CEO Barrie Brien: Some clients have a "cautious outlook"
Creston CEO Barrie Brien: Some clients have a "cautious outlook"

Announcing results for the nine months to the end of December, the Nelson Bostock Unlimited, Fever Unlimited and Red Door Unlimited owner said like-for-like revenue growth accelerated from one per cent in H1 to two per cent in Q3, leaving growth of one per cent across the nine months.

Overall revenue growth (including acquisitions) was 11 per cent in Q3, against eight per cent in H1 and nine per cent in the nine months to end of December. The firm's financial year ends on 31 March.

However, London-headquartered Creston said that in the first few weeks of 2016, it has been advised by "a number of clients, across multiple-industry sectors, of project delays and cuts".

"Some of these relate to client-specific circumstances, and others are due to increasing concerns that some of our clients have about the trading outlook for their businesses given the current uncertainty in the global economy. This will lead to significantly reduced revenue growth for the group in the fourth quarter compared with the board's expectations, and given the proximity to the financial year-end, there is limited opportunity to mitigate the impact on operating profit from the reduced revenues."

Creston said it expected full-year revenue to rise approximately eight per cent to £83m, with growth flat on a like-for-like basis and pre-tax profit "slightly below the prior year" at £9.9m.

However, the company said it "continued to enjoy considerable new business success" in its third quarter.

New business wins included the Vodafone Customer Value Marketing account, appointments as both Sony Mobile and McLaren's global lead digital strategy agency, Creston Unlimited's appointment as British Airways' CRM and data strategy adviser, the local marketing of Bosch Power Tools and Garden UK and the CRM and digital strategy for Weetabix. In October, PRWeek reported that global PC and tablet accessories provider Logitech had appointed Creston agencies Fever Unlimited and Things Unlimited to a UK PR and social brief believed to be worth six figures.

Barrie Brien, group CEO of Creston, said: "We continue to win an enviable list of new clients across the group, demonstrating the relevance of our Unlimited offer in the marketplace and representing a material increase to the wins last year.

"We are disappointed to have been impacted in January by a combination of one-off circumstances specific to certain clients and a cautious outlook from others, but with the good progress against our strategy, the full-year effect from our new client wins and operational efficiencies made earlier in the financial year, we are establishing a strong foundation for future growth."

The latest results announcement follows a challenging period of trading for Creston. At its half-year results announcement in November, Creston cited the impact of the weakening Euro and "client budget weakness" for slowing growth.

In the third quarter of 2015, Creston announced the departures of Nelson Bostock chief executive Lee Nugent, and Catherine Warne, CEO of Health Unlimited.

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