Revenue dips 5.1 per cent at Huntsworth PR shops in 2018, Grayling down 7.6 per cent

Like-for-like revenue at Huntsworth's comms agencies fell 5.1 per cent in 2018 - and declined by 7.6 per cent at Grayling, although that agency became more profitable in both the UK and the US.

Revenue in Huntsworth's Communications arm was £73.4m (2017: £77.6m), with operating profit down from £7m to £6m, the firm announced this morning.

Profit was flat excluding one-off reorganisation costs of £1m, related to "further reorganising and right-sizing elements of the offering".

Revenue at its biggest comms agency, Grayling, was £38.3m (2017: £41.7m). One-off costs of around £1m contributed to an overall loss of £0.4m (2017: profit of £0.7m).

Huntsworth said: "This performance is largely the result of a decline in profitability in Grayling Europe and one-off contract profits in the Middle East last year, which offset improvements in profitability in the UK and the US."

Like-for-like revenue at consumer shop Red fell four per cent in 2018. The firm said this was "expected following the loss of its largest client in H2 2017 via a procurement-led process".

However, performance "improved sharply" in the second half of the year, with the agency "back in growth mode as the comparatives unwind and the benefits of recent client wins start to come through". "We anticipate this growth trend to continue in 2019."

Margins at Red "continue to hold at strong levels", Huntsworth added.

The company’s financial agency, Citigate Dewe Rogerson, "performed well" with revenue "broadly flat" at £21.9m but profitability "sharply improving" by 19 per cent to £4.1m.

Margin at Citigate grew from 15.9 per cent to 18.8 per cent, with Huntsworth citing "the impact of last year's restructuring and the focus on more profitable clients". "All business units made progress against the prior year with the exception of the Netherlands where the transaction environment was softer than last year."

'Steady year'

Outgoing chairman Derek Mapp said: "It was a steady year in our Communications division. Red had a good year, despite the effects of client attrition in 2017, and ended the year with a return to growth. Strong wins in the year emphasise its fundamental strength and provide a positive outlook for 2019. Citigate Dewe Rogerson again had a solid year, despite a much quieter IPO market in the Netherlands and Asia.

"Grayling's performance was mixed, with strong growth in the UK being offset by a deteriorating position in Europe. We look forward to an improved financial performance in 2019 as we have now completed the restructuring of this business and right-sized the cost base."

CEO Paul Taaffe said: "While the group is firmly focused on developing and adding to its Healthcare assets, the Communications division continues to remain an important part, contributing 15 per cent of profits before central costs. This remains a mixed group of agencies in terms of their individual performance and development, although it has been pleasing to see improving performance in key agencies this year."

He added: "The Communications division continues to make progress and, whilst its revenue growth will remain modest, its profitability will improve as a result of measures taken over the past year."

Growth

Across the company, pre-tax profit rose 15 per cent on a like-for-like basis to £30.9m, which is ahead of market expectations.

Revenue was £225m, up 14 per cent overall or +1.4 per cent on a like-for-like basis – during the year Huntsworth acquired three agencies in its Marketing division: Giant, Navience and AboveNation.

Growth was led by the Medical and Immersive divisions, which both had "outstanding years", Mapp said. Like-for-like revenue growth in the divisions was 12.9 per cent to £34.2m, and 33.9 per cent to £35.4m, respectively.

Mapp described the financial performance in its marketing arm as "disappointing", with like-for-like revenue down 3.2 per cent to £82m, "reflecting a mix of delayed client project expenditure and drug failures, in addition to its exposure to tough comparatives".

"We saw an improvement in the second half and, as those comparatives unwind and the benefits of the broader offering are realised, we remain confident for an improved performance in 2019," Mapp added.

Taaffe said: "Huntsworth has had another year of strong progress, led by stronger growth in its Healthcare divisions. Our strategy to position ourselves as a leading healthcare services-focused business continues to gain traction and was further enhanced this year with the acquisitions of Giant, Navience and AboveNation in our Marketing division. We are well positioned for additional growth in 2019 and beyond."

Mapp leaves Huntsworth today after joining in 2014. The new chairman is David Lowden, who has been at Huntsworth since 1 January as a non-executive director.

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