Trading Statement

RNS Number : 5549U

St. Ives PLC

19 January 2017

 

19 January 2017                                   

St Ives plc ("St Ives" or the "Group")

Pre-close trading update

St Ives, the international marketing services group, is today providing a pre-close trading update ahead of the announcement of its results for the half year to 27 January 2017, which will be released on 7 March 2017.

Strategic Marketing

Revenue for the Strategic Marketing segment for the half year is expected to be approximately 9% above the equivalent period in the prior year. Excluding the effects of acquisitions and currency movements, like-for-like revenue is expected to be broadly in line with the prior half year.

As previously reported, we experienced a number of project cancellations and deferrals in the last quarter of the previous financial year, which have also impacted revenue growth and operating margin within the first half of the current financial year. We remain encouraged by the progress that has been made to replace the cancelled work. However, this process is taking longer than previously anticipated, and it is unlikely that we will see the full benefit of the new work we have won until the final quarter of the current financial year.

Books

Within our Books business, revenue for the first half is expected to be approximately 13% above the prior half year. Trading during the pre-Christmas period has been generally positive and was particularly helped by the two recently published J.K. Rowling titles.

Marketing Activation

Trading conditions within our Marketing Activation segment continue to be very challenging due in large part to the ongoing pressures within the grocery retail sector, the segment's largest single market. We expect the rate of revenue decline to have reduced in the first half of the financial year to approximately 2% (compared to a 7% decline in the previous full financial year) although the pressure on operating margin has increased.

Diversification of the client base to reduce this segment's dependency on the grocery sector remains a priority and we have secured a number of new client wins in the half year, although at lower margins than historic levels due to the increasingly competitive nature of the market. 

Due to the increased pressure on operating margins we have initiated further cost reduction measures within the segment.  The benefits of these actions are expected to come through in the final quarter of the current financial year.

Outlook

As a result of the above, the Board now anticipates that the out-turn for the full financial year will be materially below its previous expectations with the majority of the shortfall due to the pressures within the Marketing Activation segment.

The Board remains confident in the long term strategy currently being pursued, and in the growth opportunities open to the Group.  The balance sheet remains sound and we have the necessary cash flow capabilities to support our investment priorities and to further reduce debt.

- Ends -

For further information contact:

St Ives plc                                                        020 7928 8844

Matt Armitage, CEO

Brad Gray, CFO

MHP Communications                                     020 3128 8100

John Olsen / Giles Robinson / Gina Bell

 

END

 

 

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