25th Apr 2016 07:20
LONDON (Alliance News) - St Ives PLC said Monday it expects its underling pretax profit for its current financial year to be "materially below" its current expectations, and warned the following year would also be hit.
Shares in the marketing services company were down 36% at 143.37 pence shortly after market open Monday, the biggest faller in the FTSE All-Share.
St Ives said its trading overall in the eight months to the beginning of April had continued to be "broadly in line" with its expectations, with revenue up 5% compared to the previous year, however its outlook for the final quarter to end-July and following financial year has deteriorated.
Whilst trading across its Strategic Marketing segment has seen a strong year to date, current global economic uncertainty is resulting in greater caution in the allocation of marketing budgets, and this level of uncertainty has increased of late, resulting in significant projects being deferred or cancelled.
Additionally, its Marketing Activation segment is facing challenging conditions, primarily as a result of ongoing pressures in the UK grocery retail sector worsening. This has resulted in revenue running around 11% below the previous year, as well as reduced margins. It is working to diversify its client base to help with this, but said the benefits of this will "inevitable take time" to show through in its financial performance.
Meanwhile, its books business revenue is running slightly behind the previous year, as growth secured from a contract with Penguin Random House has been offset by de-stocking in the market.
"It is disappointing to have to report this marked deterioration in the near-term outlook, but we remain clear on our long-term growth priorities and have the financial strength to continue to support our strategic ambitions. We continue to believe there is further scope to expand our higher margin Strategic Marketing activities both organically and through acquisition, and to invest in our growing international operations and client offerings in the US and Asia," said Chief Executive Matt Armitage in a statement.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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