HRG Reports 7% Drop In First-Quarter Client Revenue

Hogg Robinson Group's revenues from clients were 7 percent below its expectations for the first quarter of its fiscal year, which ends on March 31, 2010, the company this week announced in an interim management statement ahead of its annual general meeting.

The company attributed its lower-than-expected revenues to swine flu's impact on travel activity and the continued trend of clients reducing travel. HRG also noted "some pressure from suppliers as they seek to reduce their distribution costs."

"We are facing challenging comparatives in the first half, given that the first half of last financial year preceded the start of the current global recession," the statement said. "We would also point out that the majority of the Group's earnings have traditionally come in the second half of the financial year. Although forward visibility remains limited, the Group remains committed to maintaining a cost base that is appropriate for ongoing revenue whilst not damaging our reputation for superior client service."

However, the company's board of directors projected that the full-year performance of HRG would be in line with expectations.

In June, HRG CEO David Radcliffe told Business Travel News that steps taken to reduce costs, the new sales pipeline and the TMC's previous shift away from a strong reliance on supplier-generated revenues had HRG well-positioned to make it through the downturn.

"In America, where you have seen big transaction volume drops, you see a link to supplier payment drop as well, which must be hurting our competitors," Radcliffe said. "I'm not saying we don't get income from suppliers. We do. In the main, it's linked to service-level agreements for work we do on their behalf. It's not driven by big volume payments that subsequently disappear."