Chime hit by redundancies but profits
rise by 14%
LONDON - Chime Communications saw full-year pre-tax profits rise by 14% to £16.3m in 2001, but has taken a £6.3m charge in exceptional costs, more than half of which is related to redundancies.
It was a heavy year for redundancies at Chime, with the company's headcount falling by 15% from 1,068 at the beginning of the year to 912 at year end. Turnover was up from £147.9m in 2000 to £155.2m.
The group, which owns advertising agencies HHCL & Partners and Roose & Partners, as well as the PR firms Bell Pottinger and Good Relations, hinted that there might be more redundancies to come.
In a statement, the company said: "Our major costs are people and we target our personnel costs to be no more than 60% of our 2002 operating income". Last year, personnel costs were 64% of operating income.
Chime admitted it was a difficult year for its advertising businesses -- although this was masked somewhat in the figures, which show operating profit up by 36.4% to £7.5m from £5.5m in 2000. HHCL lost major clients including Egg, AA, Tango and Amazon, but did win the Captain Birds Eye account on a Europe-wide basis.
The smaller Roose faired better, winning accounts such as Finish and Vanish from existing client Reckitt Benckiser.
In addressing the problems which have hit HHCL, Chime said that it was time to move the agency forward "from its positioning as a highly creative UK-based advertising agency to become able to offer the same creative quality with delivery across the international markets". It says it has planned for this to happen in the first half of 2002.
The public relations businesses, which accounts for more of Chime's operating income than the ad businesses, saw operating margins improve from 17.2% in 2000 to 19.4% in 2001, after the group instigated cost-cutting measures. Operating profit for the division was £7.2m, up from £5.7m in 2000.
Looking forward, Chime, headed by chairman Lord Bell, said: "This year will be very testing and the first half, unlike previous years, will be a lower proportion of our total achievement." However, the statement added "it is reasonable to be optimistic about the second half".
Shares were trading down by 2p, or 1.53%, this morning at 128p.
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