London: Management Consulting Group PLC suffered falls in profit and revenues in the year to December 31st 2013. However the firm reports a stronger second half performance in Alexander Proudfoot and encouraging progress in Kurt Salmon, its two consulting practices.
- Revenues of £257.3m (2012: £285.8m); approximately 10% lower
- Underlying operating profit of £21.2m, down from £25.7m in 2012
- Underlying operating profit margin slightly lower at 8.2% (2012: 9.0%)
- Profit from operations of £17.5m, down 4% (2012: £18.2m)
Nick Stagg, Chief Executive, commented, "Whilst the Group's results for 2013 do not match those in the previous year, the second half performance was significantly better than the first half. We remain focused on improving the performance of Alexander Proudfoot and will invest in this business in 2014 to improve its longer term performance. Kurt Salmon has had a good start to the year and we expect to see some underlying revenue growth and a continued slight improvement in operating margins in 2014. Overall, we remain focused on leveraging our core expertise and market leading positions to deliver improved results."
Chairman Alan Barber added, "The performance of the Group's businesses in 2013 was adversely affected by a poor first half in Alexander Proudfoot and the continued impact of market weakness on the Kurt Salmon operations in France. We saw a much improved performance overall in the second half of the year, which has provided a more encouraging start to 2014.
"In Kurt Salmon we have worked hard to protect our margins and profitability to mitigate the effects of market weakness in France, where Kurt Salmon has its largest and most broadly based practice. Our French business remains a market leader and is well positioned to benefit as conditions in the country improve.
"In other European markets, in North America and in Asia, Kurt Salmon has continued to make progress. I am pleased that we improved our margin in Kurt Salmon despite lower revenues, a reflection of the actions taken in the last two years to focus on the profitability of our core practices, as well as the market strength of the Kurt Salmon brand, the quality of our offering to clients, and the capabilities and dedication of our people. Although it is still early, the first weeks of the new financial year have shown promise across the Kurt Salmon business.
"After a weak first half, Alexander Proudfoot's revenues recovered strongly in the second half, up more than 40% on the previous six months, but the results for the year as a whole did not match those reported in 2012. Alexander Proudfoot has had a weak start to 2014, and although the pipeline of prospects is encouraging, and taking into account currency headwinds, we have a cautious view on the outlook for the business at this stage of the year.
"The volatility seen in Alexander Proudfoot over the course of the 2013 has been a feature in previous years, and will remain an issue for the business whilst it is based on the sale and delivery of a relatively small number of discrete large scale projects in any given year. Proudfoot has a unique and compelling offering and the Board has concluded that development and investment are now required to provide it with a firm platform for profitable growth in the future. We expect these initiatives to have some negative impact on the profitability of the Alexander Proudfoot business during 2014, but over time they should help to build a more stable and predictable revenue base and drive top-line growth."
Barber confirmed that, Luiz Carvalho has stepped down as CEO of Alexander Proudfoot and as a director of MCG.
Nick Stagg will now take on the role of CEO of Alexander Proudfoot on an interim basis in addition to his Group CEO role.
Barber himself intends to step down as Chairman of MCG at the end of 2014.