Huntsworth also said it expected full-year results for the group for 2017 to be ahead of consensus, having "traded well" in the four months to 30 April, led by its Huntsworth Health arm.
In a trading update for the period, Huntsworth said Grayling's UK business - which accounts for about one quarter of the agency's global revenue - returned to profitability since the start of the year.
A "large part of Grayling" is now profitable, Huntsworth said, although the US and META (Middle East, Turkey and Africa) regions "remain challenging". "Although we expect a decline in Grayling’s like for like revenues this year, the division is trading in line with management’s expectations," the company stated.
Earlier this month Huntsworth CEO Paul Taaffe said Grayling "continues to emerge from a transitional period" as the company announced the promotion of Sarah Scholefield to UK chief executive. Like-for-like revenue at Grayling fell 17.4 per cent to £53.9m in 2016 as it reported a loss of £0.8m amid an on-going restructure.
Huntsworth said its consumer agency Red "performed strongly" in the four months to 30 April, with revenue up "over 10 per cent" and "a number of new client wins". However, Huntsworth added: "Some client churn is expected in the second half of the year which will dampen the overall annual growth rate."
Meanwhile, financial PR shop Citigate Dewe Rogerson had a "mixed trading period", with like-for-like revenue down two per cent.
Citigate’s operations in the Netherlands, Singapore and Hong Kong "performed well", but "slower transactional markets in the UK and mainland China have impacted overall revenue growth and profitability and will likely weigh on the business further during the year".
Huntsworth Health, the group’s health marcoms division, led growth at the group overall, with like-for-like revenue up more than 10 per cent over the four months. The company said there was "good margin performance despite ongoing investment in talent and further diversification in two of the agencies".
Huntsworth said that "as a result of the stronger growth at Health and Red" and "improved prospects at Grayling", it expects full year pre-tax profit to be ahead of the current mid-point analysts’ consensus of £19.3m – last year it achieved £16m.
Huntsworth added: "The group remains focused on driving operating profit by concentrating resources on its faster growing agencies and actively managing those underperforming ones. The board is confident of continued progress through the remainder of 2017."
Huntsworth’s share price rose 3.5 per cent this morning to 51p.