Currency challenges and Brexit keep Enero outlook cautious
After posting its healthiest annual results in years and cementing its first agency acquisition in seven years, Enero has revealed a first quarter hit by currency fluctuations and the impact of the Brexit vote.
Melhuish: Despite the currency fluctuations, Enero will “focus on the things we can control”
Announcing its Q1 2017 financial year update, Enero chairman John Porter said the group faced “significant headwinds” from the currency exchange shift and the general downturn in UK economic confidence.
Net revenue for the group dropped 14% from $24.7 while operating EBITDA was $2.2m, down 40% on the year before.
“Despite the tough start, we continue to be optimistic about the long-term earning capabilities of the group,” Porter said.
CEO Matthew Melhuish said that the company would not be diverted by the currency fluctuations, but would “focus on the things we can control”.
“Within this we have seen a common currency impact of $2.4m on revenues and $0.5m on operating EBITDA simply due to currency exchange compared with the prior year,” Melhuish said.
“The remainder of the decline compared with the prior year has mostly been focused in the UK where confidence appears to have diminished following Brexit and we have seen a weaker pipeline and much longer lead time for clients to sign off projects.
“The flat spot of the first quarter will not stop our drive and we continue to believe in the long-term goals for the group.”
During the AGM Melhuish again highlighted the strong recovery Enero had enjoyed in the 2015/2016 financial year and noted the positive impact of the recent acquisition of PR firm Eastwick Communications in the US, which is being made part of the Hotwire group.
The first acquisition since the company bought Dark Blue Freeway in Brisbane in 2009, the initial $5m payment was funded from Enero’s cash reserves, which topped $37.6m at the end of the 2015/2016 financial year.
“Our ultimate goal is to achieve a more evenly balanced geographic spread between our three key markets for greater stability across the revenue base,” he said.
Enero shares were trading down 5 cents at $1.10 at midday.
