A rapid shift to online bookings, weaker European trading, lower-than-expected levels of business from a big contract and a strong pound hogtied business-travel specialist Hogg Robinson (HRG) in the first six months. Operating profit fell 15 per cent to £15.4m, prompting management to reaffirm plans to pursue £20m of cost savings over the next three years.
Growth was driven by a large contract with the Canadian government - though chief executive David Radcliffe told us it wasn't as strong as hoped, as initial volumes were misjudged. Nonetheless, the contract did boost revenues by 10 per cent in North America, contributing to a 2 per cent constant-currency increase in group sales.
But while Hogg wallowed in the improving North American economy, it continued to struggle in Europe. Revenue on the continent fell 4 per cent at constant currencies, as client travel spending fell and the number of lower-margin online bookings increased much faster than anticipated. In response, finance director Philip Harrison says the group will reduce office space and get more people to work from home.
Broker Canaccord Genuity expects full-year adjusted pre-tax profit of £30m, giving EPS of 6.5p (down from £35.8m and 7.8p).
| HOGG ROBINSON (HRG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 42p | MARKET VALUE: | £ 136m | |
| TOUCH: | 42-43p | 12-MONTH HIGH: | 88p | 39p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 9 | |
| NET ASSET VALUE: | * | NET DEBT: | £59m | |
| Half-year to 30 September | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 168 | 11.4 | 2.4 | 0.63 |
| 2014 | 162 | 9.2 | 1.9 | 0.63 |
| % change | -4 | -19 | -21 | |
Ex-div: 04 Dec Payment: 02 Jan * Negative equity shareholders' funds | ||||
