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Huntsworth sounds hopeful note despite Grayling challenges

The public relations group showed signs of progress but was held back by its Grayling agency
July 26, 2016

Cost reductions, investments and patches of positive trading underpinned gains at Huntsworth (HNT) in the reported period. Although the public relations (PR) specialist's underlying sales only inched upward, wider margins in three of its four divisions meant adjusted operating profits leapt 16 per cent to £7.3m.

IC TIP: Hold at 40p

Comparable sales climbed 11 per cent at Huntsworth Health as it snatched market share and satisfied robust demand in the US for digital and medical communications. The group's largest division also won clients in new areas such as genomics, diagnostics and medical devices. Like-for-like revenues also rose 4 per cent at Citigate, as the financial PR specialist landed clients including Hotel Chocolat and oversaw the landmark flotation of Frasers Logistics in Singapore. And the smaller Red agency signed up Spotify and worked with Boots, Emirates and Samsung.

Comparable sales slumped 15 per cent at Grayling, as the PR agency weathered tough trading in the US. It also lost clients and suffered delays to renewals in the Middle East and Africa. Management is slashing overheads, cutting back on government lobbying and refocusing the business on larger, longer-term accounts in the US. It anticipates that its restructuring efforts will return the segment to profit by the end of 2016.

Broker Numis expects pre-tax profits of £15m this calendar year, giving EPS of 3.2p (from £13.3m and 3p in 2015).

HUNTSWORTH (HNT)
ORD PRICE:40pMARKET VALUE:£131m
TOUCH:39.5-40.5p12-MONTH HIGH:48pLOW: 34p
DIVIDEND YIELD:4.4%PE RATIO:na
NET ASSET VALUE:47p*NET DEBT:24%

Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2015101-45.9-13.50.5
2016105-8.9-2.70.5
% change+4-- 

Ex-div: 29 Sep

Payment: 4 Nov

*Includes intangible assets of £173m, or 53p a share