HRG Posts Revenue Growth, Cautions On Outlook

Hogg Robinson Group last week posted significant revenue increases for the first six months of its fiscal year, which ended Sept. 30, buoyed by revenue growth in all regions and favorable currency exchange rates. However, CEO David Radcliffe said that for the first time in 38 years he is being cautious as the economic conditions worsen.

Radcliffe said client revenues for October and November have declined by 3 percent. "It's all very well talking about the future in terms of a bad macroeconomic climate, but the past six months haven't exactly been full of joys," Radcliffe told Business Travel News today. "We were reasonably pleased with our performance but are cautious about looking over the horizon. None of us have seen anything like this before."

Meanwhile, for the first six months of the operating year, HRG's global revenues increased 10.8 percent year-over-year to £171 million. Much of that growth is from favorable currency movements, while 1 percent is from organic growth and 0.8 percent is attributed to acquisition.

Asia/Pacific showed the strongest regional growth with an 18.2 percent increase to £10.4 million. European revenues, which comprise 75 percent of the company's business, increased 12 percent year-over-year to £128.1 million. North American revenues increased 4.2 percent to £32.5 million.

In light of the worsening global economy, Radcliffe said the company is evaluating its cost structure and operating expenses, which increased 11.1 percent to £159.7 million during the six-month period.

Compared with the same period in 2007, staff decreased by 43 people to 6,372, and Radcliffe indicated more reduction could be on the way depending on volumes. "A lot of our cost cutting is linked directly with the work that the client does," he said. "So, that tends to be an automatic process. We've got just over 6,000 staff around the world that we directly employ. Of those, about 1,000 are not client facing and, as you would expect, we are reviewing those virtually every day."