HRG speeds up further cost savings
Friday, 13 Feb, 2009
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Hogg Robinson Group is speeding up planned cost savings with a reported loss of 300 jobs to counteract the economic slump.
The international corporate travel services company has already made changes to administrative and support functions to reduce costs and improve efficiency.
“We are now accelerating plans to reduce costs in other parts of our operations to reflect our cautious outlook for trading during 2009,” the company said.
The changes are expected to cut annual operating costs
by £10 million but will involve a one-off cost of approximately £5 million before tax.
Chief executive David Radcliffe said: "We are by no means immune to the current market conditions, but our business has held up well so far thanks to our diversified client base and strong cost control.
“We continue to retain our existing clients and are adding new ones regularly, but recognise the need to plan for the future based on a cautious outlook.
“We have already reduced back-office costs and are now taking action to re-shape other parts of our business so that we are in a position to exploit the opportunities when the trading climate picks up again.
“In the current macroeconomic climate, it is difficult to predict with any certainty the outcome for the key fourth quarter of our financial year but, based on our performance to date, we remain hopeful of finishing the year in line with market expectations."
An interim management statement from HRG covering the period from October 1, said client revenue in the four months ended January 31 was up five per cent compared to the same period in the prior year.
But after excluding the impact of favourable currency movements, this translated into a six per cent decline.
“Our diversified client portfolio has allowed our business model to be relatively robust in the face of some very challenging economic conditions,” the company said.
“We are continuing to reduce our cost base and to improve efficiency so that we will be well placed to take advantage of the economic recovery when it happens.
“We have adequate committed funding in place at attractive rates until September 2011.”
The statement added: “Our clients are, for the most part, continuing to travel although they are clearly looking at less expensive options.
“Our clients pay us for the work that we do rather than the cost of their travel so that, as we work with them to reduce their travel
costs, our revenue remains relatively resilient.
“Inevitably, in some sectors we have seen a decline in activity as a result of fewer passengers and less frequent travel, but the impact has been somewhat mitigated by the increasing contribution from new business wins coming on stream.”
HRG said it maintained a client retention rate above 90% and is winning more business than it is losing.
Since October 2008, it has extended desls with Barclays, HSBC and News Corporation, and added AMEC, Astellas Pharma, Groupe SEB and Monte dei Paschi di Siena Bank as new clients, amongst others.
by Phil Davies
Phil Davies
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