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Enero profits drop 26% in ‘difficult trading year’

Australian based marketing and communications group Enero has seen net profit drop 26% for the 2016/2017 financial year on the back of a 12% drop in revenue.

Enero’s board, John Porter, Anouk Darling, Matthew Melhuish, Susan McIntosh and Roger Amos

Citing a “challenging trading year” the group which includes BMF, Frank PR, Naked, The Leading Edge and Hotwire, saw net revenue drop from $113.5m in 2015/16 to $100.2m in the 2017 financial year.

Operating earnings before interest, tax, depreciation and amortisation dropped 22% while net profit after tax was $4.9m.

The result saw CEO Matthew Melhuish’s cash bonus slashed by half, from $163,862 last financial year to $81,962 in 2017.

Melhuish earned a base salary of $800,000 according to the Enero annual report with his total remuneration $1.049m, down from $1.163m the previous year.

Presenting the annual report chairman John Porter said the group would continue to look at new acquisitions after Enero completed its first deal in seven years with the takeover of PR business Eastwick Communications in the US.

“While the group had a difficult trading year, management worked very hard to protect the operating margins above 10%,” Porter said.

“Our cash conversion remains strong and this has facilitated adequate capital to meet our strategic needs. We will continue to pursue further acquisition opportunities  aligned with filling out our geographical or service areas which need presence  and more scale.

He said international markets would be the future focus “in line with our intention to unlock greater revenue opportunities.”

Melhuish said that client losses, currency fluctuations and the continuing fallout from Brexit took a toll on the business.

“From a financial viewpoint, the group was impacted by a number of client losses during the year, which is not uncommon in marketing services,” Melhuish said in the annual report.

“Ultimately a 12% decline in revenue  year on year – but only 5% on a constant currency basis – showed that the group continues to have a pleasing diversification in clients and industries and despite the client losses there were a number of exciting new business wins.”

Melhuish also flagged the group would appoint a sales and marketing director for Enero in the coming year.

“Our international markets, particularly in the UK, had a more difficult year as the fallout from Brexit hurt general economic confidence. We are seeing a slow recovery”.

In Australia Enero achieved 6% operating EBITDA growth with net revenues down from $45.9m in the 2016 financial year to $42.9m in 2017.

Europe and the UK saw revenue down from $51.2m to $37.9m while the US operations were up from $16.2m to $19.2m.

Melhuish said the outlook for the business was focused on unlocking growth and bigger multi-market clients.

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