Brexit woes, currency shifts and client losses drive down Enero results
Communications group Enero has reported a 32% drop in earnings for the first six months of the year in the wake of Brexit in the UK as well being hit by a number of client losses, with net profit down 38% to $2.3m.
After a resurgent 2015/2016 financial year, results to December 31 saw net revenue drop 11% to $51.2m compared with the same period the previous year when revenue was reported at $57.6m.
Enero CEO Matthew Melhuish said the first six months had been difficult for the group but it was still in a strong position.
“The first half of this financial year was very challenging due to difficult UK trading conditions, post Brexit, currency headwinds from the stronger Australian dollar and some client losses,” Melhuish said.
“However, we continue to focus on our strategy, building around our key geographies and our key service offerings – research and strategy, creative agencies and public relations.”
Melhuish said Enero’s strategy ofbuilding its operations in the US continued to provide dividends.
“We have successfully expanded our USA footprint with the completion of Eastwick Communications and we remain very positive for future success,” he said.
The company’s bottom line was boosted by the completion of the acquisition of Eastwick in the US, the first acquisition by the company in seven years.
Melhuish: “We have successfully expanded our USA footprint with the completion of Eastwick Communications and we remain very positive for future success”
However, a strengthening Australian dollar played havoc with Enero’s numbers with the stronger Australian dollar reducing reported net revenue by $4.9m and reported Operating EBITDA by $1m.
Net revenue for the UK and Europe was down 27.4% to $19.6m, or 12.2% on a constant currency basis.
Australian net revenue dropped 3.9% to $22m while the US saw revenue rise 27.7% (28.5% on constant currency basis) to $9.6m.
Operating EBITDA in the UK and Europe was savaged, down 52.2% to $3.2 – or 40.4% on a constant currency basis – while the US was down 14.3% to $600,000.
Total operating EBITDA was down 27.1% to $7.8m.
Key highlights in Australia included a strong performance for BMF and Naked; however, Dark Blue Sea was hit by lower domain sales.
In the UK and Europe it noted the “significant impact of Brexit on general consumer and economic confidence has resulted in weaker pipelines and longer lead time to convert projects in UK market.”
While Hotwire and Frank PR showed growth, Naked was hit by the loss of eBay and Virgin Atlantic.
Despite the challenges, Enero continued to have cash on hand of $33.9m.
Last week saw the resignation of Enero director Russel Howcroft, who was replaced by Anouk Darling.
Enero shares were trading down 6.5% at .85 cents at 12:30pm.
