Synovate Prepares to Tighten Belt

UK marcoms group Aegis has posted overall organic revenue growth of 8.2% for the first half of 2008. Research arm Synovate reports healthy revenue and profit rises but has reduced expectations for 2008 organic market growth to 4.1% from 5.1%, in the light of tough trading conditions.

Total revenue at Synovate was £221.7m (H1 2007: £192.8m), up 10.1% on a constant currency basis and 15.0% at reported rates. Underlying operating profit of £7.9m (H1 2007: £7.0m) was up 9.7% on a constant currency basis and 12.9% at reported rates.

At 5.2%, organic revenue growth remained ahead of the market in spite of 'softer conditions' in the US, in particular in the healthcare sector. At the same time, Synovate said it had made good progress in Asia-Pacific and Central and Eastern Europe and the Middle East.

The firm says its global client relationship ('GCR') initiative of dedicated account management and aligning teams to clients' structures contributed to strong growth in global project awards. It also created a new practice in Customer Experience, which marries its expertise in customer loyalty and employee engagement with performance tracking, mystery shopping, footfall analytics and shopper behaviour analysis, along with customer experience consulting services.

In addition, Synovate is currently in the process of undertaking a global re-launch of its qualitative offer, with dedicated senior staff leading global research strategy across individual clients worldwide, and the launch of a set of global tools.

During the first half of the year, Synovate EMEA saw a revenue hike of 12.5% to £111.0m (H1 2007: £92.2m) on a constant currency basis and 20.4% at reported rates. Trends across EMEA varied by national market, with Spain being 'more challenging'; Germany and the Netherlands trading well; and France, Italy and the UK remaining low-growth but stable markets. In Belgium, the Censydiam motivational research group was down. Central and Eastern Europe continued to perform well, with particularly good growth from Russia, Ukraine and Turkey.

South Africa contributed another strong performance, and last month the firm completed the acquisition of pan-African specialist Steadman Group.

Synovate Americas revenue of £60.9m (H1 2007: £58.3m) was up 4.6%. In the US, the firm joined other big agencies in reporting the healthcare sector was 'difficult', as pharma clients scaled back budgets, and the firm saw a decline in revenue. Excluding healthcare, growth remained positive, with resilience in financial services and the public sector offsetting some weakness in consumer products.

Latin America saw positive trading in existing markets, helped by the acquisition of CIMA Group in January.

'Our financial performance has been good in the first half of 2008', commented Aegis CEO Robert Lerwill. 'We achieved these results despite a trading environment that is becoming tougher. Consequently our revenue outlook for the second half of 2008 is less certain. We anticipate a lower rate of market growth than in the first half and are therefore taking some early steps to tighten our cost base in a number of markets. Nonetheless, we remain confident of delivering a result for the year at the upper end of market expectations.'

Web sites: www.aegisplc.com and www.synovate.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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