BMF, Naked drag Enero's earnings down 70%

By By Paul McIntyre | 15 February 2013
Enero CEO, Matthew Melhuish.

The all new Photon, rebadged Enero, reported an earnings slump and a revenue fall for the December half due to its flagship ad agency BMF being hit by the Commonwealth Bank direct marketing account loss and Naked struggling in depressed Europe markets and other “non-core” offices.

However, Enero CEO Matthew Melhuish said ongoing reports from sections of the trade press that BMF was in deep trouble were “rubbish, entirely wayward” and “quite disgraceful”.

He said a rebound from BMF would “prove a few naysayers wrong”.  Melhuish was a co-founder of BMF.  
The radically slimmed down publicly listed Enero,  which offloaded its field marketing divisions, another advertising group BWM and a host of other operations last year to clean out its debt, posted a net loss of $77.6m for the six months to December last year. The loss was due to further writedowns  in the value of its intangible assets.

Pro forma revenues – that is, the performance on like-for-like businesses after the sell-off of other Enero divisions – was down 12 per cent from $75.1m to $66.1 million for the December half. Pro forma earnings before tax and depreciation dropped from $7.4 million to $2.2 m.

Enero now has 11 companies in its portfolio, which includes global tech PR firm Hotwire and Frank PR and local stakeholder communications firm Precinct.
“We feel we are making good progress,” Melhuish told AdNews. “We’re on a journey of a turnaround and there are a lot of great things happening with our companies. We’re looking forward to the results reflecting that.”  

On BMF, Melhuish said: “BMF is an outstanding agency. Client satisfaction and effectiveness of the work is all outstanding. BMF has had a few naysayers around the place with their own agenda. It has a highly capable group of people, a proud history and a lot of capability. Like any business it needs to keep pushing it and tweaking and we are.”

Late last year Enero announced a $2 million investment program in Naked globally.

“Naked Communications continues to be impacted by difficult trading conditions, especially in Europe and smaller non-core offices where discretionary projects have been reduced along with a general reduction in client spending,” Enero said in its results statement. “Naked has commenced executing the investment program which is aimed at investment in senior leadership, IP and tools to complete an operational realignment of the business.”

On BMF, Enero’s statement said: “BMF has been impacted by the loss of the retained Commonwealth Bank business, reducing overall operating margins.”

In the statement Melhuish said: “I am confident we will see the benefits of the initiatives we have rolled out over the past six months. It is vital we continue to stay true to our strategic goals to deliver results in the long-term.

“Although it has been a tough half financially we have taken many positive steps over the past six months to improve our operating structure and processes and strengthen the foundations of the group. We have secured some extremely talented individuals in leadership roles, we have achieved a new level of cross-collaboration between our operating companies and have embraced new ways of doing business to bring the Group together.”

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