Creston issues profit warning as clients draw in horns on economic concerns

Creston has warned that full year profits will be below last year's after several clients delayed or cut project spending due to increasing concerns about trading.

As a result, fourth quarter revenues at the marketing communications group will fall "significantly" below management expectations.

Creston said that "a number of clients, across multiple-industry sectors", with some relating to "increasing concerns that some of our clients have about the trading outlook for their businesses given the current uncertainty in the global economy".

After 8% revenue growth in the first half, the third quarter has seen 11% growth, but the current quarter's anticipated decline will mean full year sales revenue are now expected to be up roughly 8% on the prior year to around £83m and flat if the impact of acquisitions is excluded.

Group headline profit before tax and goodwill impairments is now estimated to be slightly below the prior year at £9.9m.

Otherwise, the company was bullish about the considerable new business it had won in the third quarter, with the launch of the Creston Unlimited concept of inter-agency and partner cross-referrals "resonating with clients" and also contributing to an increased number of opportunities between Creston companies and its partners.

New business wins in the period included the Vodafone Customer Value Marketing account, appointments as both Sony Mobile and McLaren's global lead digital strategy agency, Creston Unlimited's appointment as British Airways' CRM and data strategy adviser, the local marketing of Bosch Power Tools and the digital strategy for Weetabix.

Chief executive Barrie Brien said: "We continue to win an enviable list of new clients across the group, demonstrating the relevance of our Unlimited offer in the market place and representing a material increase to the wins last year.

"We are disappointed to have been impacted in January by a combination of one-off circumstances specific to certain clients and a cautious outlook from others, but with the good progress against our strategy, the full year effect from our new client wins and operational efficiencies made earlier in the financial year, we are establishing a strong foundation for future growth."

Shares in Creston were down 18% to 101.01p by 0835 GMT on Wednesday.