YouGov Profits Plummet, Job Cuts Announced

In the UK, online market research firm YouGov has reported a 54% drop in headline pre-tax profits to £2.4m (2008: £5.2m) for the six months to the end of January. Thirty of the firm's 420 staff will be made redundant, in an effort to save £2.5m a year.

Pre-tax profit was down £0.36m from £2.98m in the prior year period, and adjusted profit before tax was down to £2.2m from £4.6m.

Group revenue for the six-month period was up 20% to £22.6m (from prior year's £18.8m).. On a constant currency basis, revenue was up by 4% for the period, however, this was offset by a 42% rise in operating costs to £16.1m from £11.4m last year.

While growth was good in Germany (up 10%) and in the US (up 30%), in the UK (up 5%) and Scandinavia (up 4%) revenues were below expectations due to poor market conditions.

Last week, UK CEO Tim Britton confirmed he is currently conducting an internal review of the business which he said will probably result in a 'small number' of job cuts.

In addition, YouGov plans to reduce the sales and back offices resources in Scandinavia and close its Austrian and Central European online development business. It will not be cutting development areas such as its syndicated global products, its online services in the Germany, and its UK custom research business.

With these measures, the firm projects costs of £0.5m, and annualized savings of approximately £2.5m in 2009/2010, with £0.3m benefit expected in the current financial year.

CEO Nadhim Zahawi said that trading conditions had become more challenging towards the end of the first half year due to the economic climate. This, coupled with an expanded cost base, had resulted in a 'disappointing performance'.

The company warned in February that revenue and profit for the year to July 31 would miss market forecasts. YouGov now says it is trading in line with the Board's revised expectations, but given the ad hoc nature of its client work, the outlook remains uncertain.

Earlier today, shares, which have fallen by three quarters in the past 12 months, rose 4% to 37.5p.

Web site: www.yougov.com .