NEWS27 August 2010

Synovate buoyed by improving market, revenue up 6%

Financials UK

UK— Synovate returned to profitability in the first half of this year, parent company Aegis said today – hailing the turnaround as a key factor in an almost 20% rise in group underlying operating profit.

The market research business booked £248.8m in revenue for the six months ended 30 June, up 6.1% on a reported basis or 2.2% at constant currency rates.

Gross profit was up 5% to £152.9m while operating profit was £4.7m, compared to a loss of £3.2m in the same period last year.

Aegis said Synovate benefited from “an improving market environment, with consistent evidence of renewed client confidence in utilising market research budgets”.

Even sectors like automotive, which was hit hard during the recession, showed improvement, Aegis said, with Japanese, Korean and several European manufacturers re-establishing research programmes and upping spend – although it said the large US auto-makers demonstrated little sign of recovery.

Still, North American sales and revenue were “ahead of market growth”, Aegis said, while Latin American sales were flat. Taken as a whole, revenue in the Americas region was up 8% to £71.9m on both a reported and constant currency basis.

EMEA revenue was up just 0.3% to £106.6m, reflecting a “varied” performance throughout the region, with solid sales performances in Africa, Germany, Russia, Turkey and the UK, and less solid performances in Spain, Greece and France.

Meanwhile, Asia Pacific delivered a revenue increase of 13.6% (or 2.5% constant currency) to £70.3m.

Aegis Group revenue, including contributions from its media planning and buying business, was up 4.2% to £663.3m. Group underlying operating profit was up 19.6% to £61.1m.

Group CEO Jerry Buhlmann (pictured) said: “For the second half, we are seeing signs of a rebound in both the advertising and market research sectors. While it is too early to predict a sustained longer-term recovery, we are optimistic about the short-term outlook for both sectors.”