Cello Revenue Up Despite Research 'Slow-Down'

UK-based insight and marketing group Cello has reported a 2.8% increase in revenue to £63.3m for the first half of the year, but has noted a 'marked slow-down' in qual and quant client research activity across its Consumer division.

Cello's research-focused agencies include Leapfrog, 2CV, RS Consulting, Insight Research Group, Face and MSI.

The group's results are the first since it split into two divisions: Cello Health, which includes certain elements of its general qual research capabilities; and Cello Consumer, which encompasses Cello Communications and consumer insight.

For the first six months of 2012, Cello says it experienced 'solid' overall growth in revenues and profits, driven by growth in Cello Health, where gross profit rose to £16.4m (2011 H1: £13.2m) and operating profit climbed to £4.1m from £2.7m.

However, Cello Consumer experienced a 5.6% revenue decline in the first six months and a consequent decline in profits, which Cello attributes to the slow-down in client research during the period. Operating profit dropped from £1.3m in the first half of 2011 to £0.1m this year, and gross profit fell from £16.3m in 2011 to £15.2m.

In a statement, the group said qual and quant client spend has now recovered 'somewhat', and that it expects full year performance in this area to improve. This profit recovery process has required a reduction in headcount and property rationalisation, incurring an exceptional charge of approximately £0.7m.

Overall for the group, Cello reported that gross profit was up 7.2% to £31.7m for the first half of 2012.

CEO Mark Scott (pictured) comments: 'Cello continues to make strong headway implementing its stated strategy. Cello Health is becoming established as a leading business in the global pharmaceutical market, the group's international revenues are growing, the group's value added advisory revenues are growing, and our web capabilities are cutting edge. This positions Cello well for future expansion in line with the strategy.'

Web site: www.cellogroup.co.uk .