Recession? What recession?

Judging by last week’s news from stock market listed public relations groups Chime Communications and Huntsworth, Britain’s latest recession might have been simply a figment of everyone’s imagination.


Chime’s chairman Lord Bell announced that his company was having a “very good year” and expected further growth during the second half of the year and onwards into 2011.


At Huntsworth, the euphoria was more muted as it acknowledged that revenues were unlikely to reach management projections.  Nevertheless profits for the year would be in line with expectations.  That cautious note followed a good first half – when revenues were up by 14% and operating margins (after excluding non-routine costs and amortisation) were restored to a healthy 15.7%.


So what is going on?


Chime’s good fortune may be due to a mixture of factors.  It has been far less exposed to foreign currency movements.  Its public relations activities have a strong bias towards clients that need more help in gloom times than in boom times.  And it has invested in businesses that appear to be benefitting from forthcoming world sporting events.  It has also invested in advertising and research, but that has not proved to be a great advantage, judging by the recent performance of those units. 


Huntsworth too will have benefitted from crisis management advice, as well as from its specialisation in healthcare marketing.  But Huntsworth has advanced its global ambitions more aggressively than Chime and, as a result, seems to have suffered more extensively from exchange rate movements during the period.  Globalisation has had other consequences too. According to Huntsworth’s chief operating officer Sally Withey there has been a time lag in gaining the anticipated income benefits from the shift in revenue streams from small value national work to larger value international and global work: ”We are showing some success in our ambitions but there is a time lag – specifically around contracts and procurement  – in making this change”, she said.



In the first half of 2010 over 60% of Huntsworth revenues came from abroad. Around 35% came from the US when the dollar was weakening, thereby boosting revenues in the period.  The first half might have been even better if European revenues had not suffered from a strengthening euro in that period. 


More recently the tide has turned and the dollar has advanced against sterling.  Perhaps that is one of the reasons why Huntsworth expects to miss its revenue forecast for the year as a whole. 


Bob Willott is editor of “Marketing Services Financial Intelligence”, providing continuing news and analysis of financial developments in the marketing communications industry

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