Hogg Robinson warns on profits as Canadian contract costs impact

22nd Jul 2014 13:58

First-half profits will be "significantly lower" at corporate services group Hogg Robinson due to continued weakness in Europe and Asia and higher costs from a major new contract.The company said full year profits were likely to be "slightly" lower than expectations, as cost cutting elsewhere was still expected to leave a shortfall.The firm, which provides technology-driven travel, expenses and other services that businesses wish to outsource, has seen market conditions in the weeks since April 1st remain broadly similar to those seen in the second half of last financial year, with recovery continuing in the UK and North America, while continental Europe and Asia generally remained weak.Revenues were crunched by clients across the group increasingly self-booking travel and because an April contract with the Government of Canada saw trading grow steadily but at a slower rate than expected.These lower revenues have been accompanied by the higher costs arising as the Canada contract ramped up.Chief Executive David Radcliffe said: "During the remainder of the year we will address the balance of costs versus revenues. It is unlikely that the associated benefits will fully offset the fall in first-half earnings, but we expect the full-year earnings impact to be significantly less than in the first-half." As a result of today's statement, broker Canaccord snipped pre-tax profit forecast for the full year by £4.5m, or 13%, to £30m.Shares in HRG were down 9% to 65.50p by 14:00 on Tuesday.OH