Chime profits up but outlook uncertain for advertising division
LONDON - Chime Communications, the PR-led group which owns VCCP and sports marketing agency Fast Track, has unveiled an 18.7% increase in annual pre-tax profits to £16.3m.
Speaking to Brand Republic, Chime chairman Lord Bell said the performance of Chime's PR agencies such Bell Pottinger is strong in part because they are leading brands, but described the outlook for the group's advertising and marketing businesses as "uncertain".
Bell said: "At the moment the signs are a bit confusing. The first quarter is on budget. We beat budget in January so that's good. And we're getting some of the signs of economic trouble, we're not getting others.
"We've got an increase in bad debt, we've got a slowing down of payments, one or two clients cutting expenditure, but we've got a whole lot of new clients coming in.
"Our new business performance is as good as it was last year, which was the best we've ever had. So it's very mixed."
Chime's 2008 results show its revenues climbed 34% from the previous year to £277.2m, while organic growth since 2006 came in at 10%.
The advertising and marketing division accounted for 39% of the group's £112m operating income and generated operating profits of £6.2m -- up 11%.
The performance of the research division continued to deteriorate last year though Chime said the first quarter of 2009 demonstrated a "healthy new business pipeline". Research operating profits were down 73% to £400,000 in 2008.
The launch of digital research platform Caucus World was delayed due to hold-ups in software development.
Asked what his view was on how the decline of the local press (in a week where Johnston Press revealed ad revenues had dropped more than 35% so far this year and MEN Media announced plans to axe 150 jobs) affected his business, Bell said: "The truth is the loss of any media is not good, the more media the better in my view.
"If we lose local titles it will be a pity because I think in this world of consumer empowerment and the internet local communication, direct communication, is even more important.
"One of the great problems of the newspaper world is they've never charged the right price for their product, they've always relied on subsidising the consumer price with advertising revenue."
"We've got more media here than anywhere else in the world and we're bound to lose some in the economic downturn. I think it's very sad."
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