Hotwire and Frank owner hails 'outstanding' FY but COVID-19 hits UK and Europe

Hotwire and Frank owner Enero has reported "outstanding" results in the year to 30 June, although the impact of COVID-19 hit revenue and profit in the UK and Europe, at Frank in particular.

Globally, the marcomms holding group saw underlying earnings (operating EBITDA) grow 17.7 per cent to A$24.4m (£13.4m) on net revenue up 4.9 per cent to A$135.8m (£74.4m). Margin grew from 16 to 18 per cent for Enero, which is listed on the Australian Securities Exchange.

The firm cited "margin protection through prudent cost management and reduction in operating costs" and a "simplified brand portfolio". It also pointed to the "higher sector exposure to technology, healthcare and consumer staples clients" alongside "lower sector exposure to travel & tourism clients".

However, in the UK and Europe - which accounts for 28 per cent of revenue - underlying earnings fell from A$6.5m (£3.6m) to A$5.7m (£3.1m) and net revenue dipped from A$38.6m (£21.1m) to A$37.7m (£20.7m).

Enero, which did not provide data for individual agencies, said the impact of coronavirus was "more pronounced" in the region than elsewhere. "This, coupled with investments made at senior levels across the UK and Europe in [the first half] saw an overall reduction in margin."

Hotwire in the UK was in line with the prior year, Enero said, with wins including NTT, Zoom, Wrike, OKCupid and Ubisoft, while its European offices achieved key wins including Group SEB, FM Global, Atlassian and Amazon Kindle.

But Frank was "down on the prior reporting period as client spending reductions from COVID-19 [impacted] the business", citing the agency's "higher exposure to consumer brand clients". Key wins in the financial year included ALDI UK, Weetabix, Primark and Atom Bank.

Enero added that "COVID-19-related government programmes in UK and Europe have not materially changed results for the businesses".

The US performance was stronger, with operating EBITDA moving from A$10.1m (£5.5m) to A$13.2m (£7.2m) and net revenue increasing from A$30.9m (£16.9m) to A$39.5m (£21.6m).

Enero highlighted the impact of currency movements alongside "significant margin acceleration from greater scale" in US, which accounts for 29 per cent of revenue.

The company said there continued to be "positive momentum" at Hotwire USA. Key wins in the period included Avaya, Intermedia, eBay and Pinterest. There was also "strong organic growth" in its existing technology client base of Adobe, Facebook, NetApp and Commvault.

In Australia, revenue fell slightly, from A$60m (£32.9m) to A$58.6m (£32.1m), although operating EBITDA rose from A$10.7m (£5.9m) to A$11.5m (£6.3m) and margin moved from 17.8 per cent to 19.7 per cent - Enero pointed to its "simplified business portfolio" in the Australian market. The company merged Australia-based Precinct with Hotwire on 1 July.

Its smaller agencies in Australia, including Frank and Hotwire, were "broadly trading in line with the prior year".

Enero chair Ann Sherry, who was appointed on 1 January 2020, said: “The group delivered an outstanding result, particularly during challenging times in the second half of the year. All of our markets were impacted in some shape by COVID-19; however everyone who works in our businesses showed great spirit, flexibility and resilience adjusting to new ways of working, along with taking care of each other and their clients.

"Our strong sector exposure to technology, health care and consumer staples resulted in 4.9 per cent organic revenue growth. The group is in a strong position to drive further growth in FY21, despite the health and economic uncertainties that lie ahead."

The group employs 600 staff in seven countries. Its portfolio also includes creative agency BMF, data consultancies The Leading Edge and The Digital Edge, digital agency Orchard and programmatic marketing specialist OBMedia.

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