Industry in good shape for recovery as Chime Communications reports growth

Industry analysts are increasingly bullish about PR after the listed marcoms groups announced a mixed set of results in recent weeks.

Mixed picture: Marcoms groups posted varied results
Mixed picture: Marcoms groups posted varied results

The consensus verdict of analysts remains positive for each of the six listed firms looked at by PRWeek, despite significantly divergent revenue growth during 2009.

Chime again topped the class, with organic revenue growth of nine per cent for PR, while its listed contemporaries saw like-for-like revenue drops of between 4.5 and 13 per cent.

'Chime's display against its peer group has been exemplary in a tough year,' said Malcolm Morgan, an analyst at KBC Peel Hunt. But he noted that costs were controlled effectively during the year across the sector.

Evolution Securities analyst Adrian Kearsey saw reasons for cautious optimism across the sector, noting that prospects were 'slowly getting better' and that key sectors such as financial PR were starting to see 'very early signs of green shoots'.

The marcoms groups almost universally reported a stronger end to 2009 than the start of the year, but sentiment among PR bosses remains somewhat mixed. While Harris Diamond, CEO of Interpublic Group, saw a 'better than expected' fourth quarter, he said there was no 'real pick-up' over the year and that retained clients had supported revenues as new business was not 'overly vibrant'.

Havas, Omnicom and Huntsworth all reported improvement during the fourth quarter on like-for-like annual figures. But analysts warned such comparisons can be slightly misleading, given the significant drop in revenue across the majority of the sector in the fourth quarter of 2008 compared with the rest of the year.

Nevertheless, Lord Chadlington, CEO of Huntsworth, was bullish about 'dramatically improving' market conditions. He said the group won £10m of new business in the first six weeks of 2010. He added: 'This time last year, many clients were nervous about their budgets and turning retained work into projects - the opposite is happening now.'

Chime Communications chairman Lord Bell said that the PR sector in general was 'well positioned', but stressed the differentials that marked Chime's performance out from its contemporaries - its stable debt position, strong cost controls and a significant international presence with low overheads: 'The first quarter is on budget and our budget requires us to do better than last year.'

HOW I SEE IT

- Lord Bell, Chairman, Chime Communications

It used to be that when you had a crisis people would say 'what shall we do'. Now it is 'what shall we say', which is why PR is well positioned. But the comms industry is converging and the narrow separations between PR and advertising and point of sale are getting smaller. That's why we have performed well.

- Adam Parker, CEO, RealWire, and chartered accountant

There is a stark variation in this predominantly, gloomy set of figures. Chime is the obvious success story, but taking account of actual business size, Edelman's performance (0.5 per cent growth) is the most impressive - maintaining its business in a falling market.

 

£795m: WPP PR and PA revenues in 2009*

£689m: Omnicom PR revenues in 2009**

£2.1bn: Approximate PR revenues from WPP, Omnicom, IPG, Chime &Huntsworth***

2.3%: Chime share price increase since 4 December 2009****

Source: *WPP; **Omnicom; ***RealWire; ****London Stock Exchange

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.