Huntsworth’s (HNT) top-line growth during the first half was largely driven by its healthcare business, where both revenues and profits were up by around a fifth on a like-for-like basis. This month the division acquired the Creative Engagement Group (TCEG) – bringing events and exhibitions to the healthcare portfolio. Elsewhere in Huntsworth’s portfolio of agencies, Grayling’s revenues fell 13 per cent once you disregard currency effects and disposals/closures, but the business’s operating margin has improved on the back of an ongoing recovery exercise.
For chief financial officer Neil Jones, Grayling has been the “laggard” of the overarching group and has thus far depressed the public relations group's share price. Huntsworth has been “unduly penalised” by the market because of negative sentiment around Grayling, despite the growth seen by healthcare. (So much for efficient market theory.) Grayling underwent a restructuring process in 2015-16, and three of its geographies – the UK, Europe and the Middle East and Africa – have all returned to profitability. Huntsworth expects to see the US business follow suit by the beginning of 2018.
Red, another portfolio agency, saw 5 per cent revenue growth. However, management is expecting client churn: Red has won Aldi (the discount supermarket chain) and a couple of other smaller clients, but Boots – its largest client – is moving to WPP later this year.
Analysts at Numis have raised their pre-tax profit forecast to £22.5m (from their original forecast of £21.5m) for FY2017 with EPS of 5.3p, up from 3.4p in FY2016.
| HUNTSWORTH (HNT) | ||||
| ORD PRICE: | 63.8p | MARKET VALUE: | £210m | |
| TOUCH: | 63.3-63.8p | 12-MONTH HIGH: | 65.0p | LOW: 36.0p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | na | |
| NET ASSET VALUE: | 45.8p* | NET DEBT: | 17.8% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 86.6 | -8.9 | -2.7 | 0.50 |
| 2017 | 94.2 | 9.2 | 1.6 | 0.55 |
| % change | +9 | - | - | +10 |
| Ex-div: | 28 Sep | |||
| Payment: | 06 Nov | |||
| *Includes intangible assets of £156m, or 47.3p a share | ||||
