22nd Jul 2014 07:30
LONDON (Alliance News) - Hogg Robinson Group PLC said Tuesday that revenue fell in the three months to June 30 as the strength of sterling continues to have some translation impact, leading the company to warn that full-year trading is now set to come in below market expectations.
In an interim management statement for the period April 1, 2014 to date the corporate services organisation said that revenue declined 6% on the previous year and client spend dropped 3% (though rose 5% at constant currency), while client travel activity saw 5% growth.
Market conditions have remained broadly similar during the current financial year to date to those seen in the second-half of last financial year, said the company, with recovery continuing in the UK and North America, while Continental Europe and Asia have remained generally weak. However, sterling's strength against all the major currencies in which the group's revenues are generated is having some translation impact, it said.
Across the business client adoption of online self-booking of travel continued to grow during the period, attributed to the company's lower transaction fees. In Continental Europe, the company also reports further softness in the SME market. "Combined with strong competitor pricing, all of these factors have resulted in downward pressure on our top line, and earnings below our expectations during the financial year to date."
Trading activity with the Government of Canada grew steadily during the period since launch in early April, though at a slower rate than originally anticipated, said the company.
As a result of the lower-than-expected revenues during the first three months, together with the higher costs maintained as the Government of Canada contract ramped up, profitability for the first-half of this year is likely to be significantly lower than in the comparable six months, said Hogg Robinson.
"At this early stage in the year, the actions we are taking to balance costs should materially improve the Group's overall performance in the second half, but it is unlikely the anticipated shortfall in trading in this first half can be recovered in full. We therefore now believe that trading for the full year is likely to deliver an outcome slightly below current market expectations," said the company.
In a statement ahead of the company's annual general meeting Wednesday Chief Executive of Hogg Robinson, David Radcliffe added "During the remainder of the year we will address the balance of costs versus revenues. It is unlikely that the associated benefits will fully offset the fall in first-half earnings, but we expect the full-year earnings impact to be significantly less than in the first-half."
Shares in Hogg Robinson dropped at the market open, trading 9.72% lower at 65.00 pence per share.
By Alice Attwood; [email protected]; @AliceAtAlliance
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