Core expects 50% profit growth as advertising market recovers

Marketing group saw demand rebound at end of 2020 despite lockdown

Core chief executive Alan Cox: ‘We’re very happy with the performance of the business and the rebound was much faster than we expected.’ Photograph: Cyril Byrne

Core chief executive Alan Cox: ‘We’re very happy with the performance of the business and the rebound was much faster than we expected.’ Photograph: Cyril Byrne

 

Marketing communications group Core said it expects profits to grow by 50 per cent this year, compared with 2020, as the market shows signs of bouncing back.

The Irish-owned company said it had seen a rebound in the fourth quarter of 2020 that had carried through to 2021, with a surge in new business. It expected profits to be between €2.5 million and€3 million, with chief executive Alan Cox saying he had a “high degree of confidence” that they would be in that window.

Advertising activity fell by a third in the second quarter of 2020 as the Covid-19 pandemic hit, Core said. Earnings before interest, tax, depreciation and amortisation fell to just under €1.76 million in 2020, from €3.26 million in 2019.

The company had been heading for double-digit earnings growth for the year pre-Covid, with growth of 8 per cent in the first two months of 2020, compared with the same period in 2019.

This was wiped out by the Covid-19 crisis, as marketers pressed pause on their advertising budgets.

Accounts filed for the company showed client billings were down to €202.4 million in 2020, from €212.1 million a year earlier. Pretax profit was €266,215 for the year, down from €1.5 million in 2019.

However, Mr Cox said he was feeling confident about the future. “We’re very happy with the performance of the business and the rebound was much faster than we all expected,” he said.

Advertising

The company, which is the largest buyer of advertising in Ireland and employs 315 people, notched up a number of new business wins in recent months. It has won deals with Aviva, Bulmers Ireland, Census 2022, Fáilte Ireland, Lindt, Nestle, Primark and Synch Payments, with the highest increases in demand coming from the creative, data, research and sponsorship practices of the business.

Total advertising investment levels industry-wide are expected to grow by 15 per cent this year, as the market anticipates a V-shaped recovery. Previous forecasts from the company estimate the Irish ad market will make a partial recovery this year, increasing by 8.9 per cent to €983.6 million following an estimated 14.2 per cent drop last year.

Mr Cox said the speed of the recovery in advertising investment is unprecedented. “Normally marketing spend lags economic recovery; that would have been the norm in every crisis in memory. But on this occasion, marketing is being used as a driver of growth. Even though we were in lockdown in quarter four last year, there was huge increase in demand,” said Mr Cox. “When the pandemic hit in quarter two, we saw a substantial fall. It fell significantly year on year and then it recovered a little bit in quarter three, but it was still in negative territory. This extraordinary rebound of demand despite the lockdown happening at that stage, it was quite phenomenal.”

He attributed to the change to the “tremendous amount of work” that has happened in the past decade on the science of marketing and empirically proving the contribution it makes to both economies, brands and businesses.

“I think that that message has finally got through to the boardrooms and people are having belief in marketing.”