NEWS18 March 2010

Improved second-half performance helps Synovate meet expectations

Financials UK

UK— Synovate rallied after a difficult first half of 2009 to report ‘strong second half revenue and cost performance’ for the year, according to figures released today by parent company Aegis.

Worldwide gross revenue was flat year-on-year at £521m, which equated to a decrease of 8.7% on a constant currency basis. Net revenue (after direct costs) was down 2.2%, or 12.6% in constant currency, to £321.8m.

After Synovate’s poor first half performance, Aegis said that increased cost savings and improved revenues “resulted in an excellent second half performance” which saw the research firm meet its full year expectations.

The group had embarked on a round of cost-cutting measures earlier in 2009, which continued throughout the second half of the year. At Synovate, staff costs were reduced by 10.8% in Q3 and 13.6% in Q4 though it’s not clear what this means in terms of headcount reductions.

Cost-cutting measures delivered “some improvement” to Synovate’s fourth quarter performance in the EMEA region, where gross revenue was down 5.6%, or 10.2% in constant currency, to £234.4m, while net revenue was down 6.4% – or 12.2% constant currency – to £138.2m.

Within Europe, Synovate saw strong performances in the UK, Netherlands and parts of Scandinavia, which offset “weaker” results in France, Germany and Spain.

In the Americas gross revenue was up 4.1%, but down 10% in constant currency, to £151.1m. Net revenue was up 2% to £102.5m, but fell 12.9% on a constant currency basis.

Aegis said: “North America has had a challenging year with lower revenues necessitating significant cost reductions to maintain a similar level of profitability. Latin America meanwhile has experienced good top line growth and combined with flat year-on-year costs, has seen a profit improvement from last year.”

In the Asia Pacific region gross revenue was £135.8m, which was an increase of 9% on a reported basis but a drop of 4.4% in constant currency. Net revenue was flat at £81.1m, but down 13% in constant currency.

Aegis chairman John Napier (pictured) said: “Synovate dealt rapidly with a mix of market and management factors, delivered further cost savings and improved efficiencies. It also produced the expected revenue improvement, indicated by the level of confirmed orders.”

Meanwhile, Aegis announced today that Synovate CEO Robert Philpott has been appointed to the parent company board while Jerry Buhlmann, the CEO of Aegis Media, will move to the position of group CEO on 1 May.