"Resilient performance" - Radcliffe
Hogg Robinson Group (HRG) today (November 27) reported a dip in revenue and profits for the first six months of its financial year.
Revenue fell by 9.2% from £171m to £155.3m in the six months to September 30 while its underlying pre-tax profit dipped by £300,000 from £7.8m to £7.5m.
The travel management said its underlying profit fell by £1.7m from £13m in the same period last year to £11.3m.
On reported earnings, its operating profit fell by £4.2m from £11.3m to £7.1m while its reported pre-tax profit dropped by£2.8m from £6.1m to £3.3m.
During the six months, Hogg said its net debt had fallen by £27m since September 2008 to £96m
HRG described the figures as "a resilient performance in challenging conditions" and said it was "well placed for the economic recovery".
It said during the six months, its client retention rate was above 90% and there had been several new wins. Among the new wins were BNP Paribas, Discovery communications and GDF Suez.
Revenue from its IT company Spendvision was up by 24%.
In North America, where HRG had implemented savings, revenue rose by 6.2% from £32.5m to £34.5m while underlying operating profit jumped form £200,000 to £2.4m.
In Europe, the TMC's strongest base, the group sent £2.3m on restructuring its network.
It reported a 13.9% drop in revenue for the continent from £128.1m to £110.3m while its underlying operating profit dropped by £3.9m from £12.7m to £8.8m.
David Radcliffe, HRG's ceo, said: "In the middle of a tough recession we have delivered a very resilient performance.
"Our ability to provide our customers with excellent service and to help them control their travel
budgets has helped to maintain our strong client retention rate and secure net new wins.
"We have continued to control our cost base tightly without damaging our ability to benefit from
the upturn when it arrives.
"Whilst we have seen some early signs of stabilisation, visibility remains limited.
"However, we continue to believe that the Group will deliver a full-year performance in line with market expectations and, looking further ahead, we believe that we are well positioned to respond as market conditions improve."
Mr Radcliffe, in an interview with ABTN, said the results showed that HRG's model - whereby 80% of its income comes from fees from clients paying for services, was holding up well in the economic climate.
But he added: "I would not say the results were good. We are not complacent and we would have liked to see growth. But you have to look at last year's results and coming anywhere near last year proves the model works."
He said that in the current climate, HRG was helping clients save money with help with changing travel policy, managing data and helping negotiate better deals with suppliers.
This, he said would help clients when they resumed travelling with a reduced cost base to match their reduced income.
While Mr Radcliffe stressed he believed there would be a recovery in the business travel industry, he believed that the number of internal meetings would fall and that corporate would be more concerned with the ROI of trips.
Nor did he believe that companies in future would pay little heed to the cost of travel.
Mr Radcliffe said that while there was some "early evidence of some relaxation" in corporate attitudes to travel, he added: "It is far too early to say if it is a trend."
He declined to predict any date for a recovery but thought things would be clearer in three to six months.
www.hrgworldwide.com