Marketing firm well on the way to recover after previous profit warnings
Companies: Kin and Carta Plc
International marketing group St Ives Plc gave a positive trading update this morning, reporting performance in-line with forecasts ahead of FY16 results in October. Stockbroker N+1 Singer welcomed the announcement, saying the results were key to further recovery in the stock that is "still materially undervalued", since its 50% collapse following the dire profit warning in April.
St Ives' share price was up 18% in early trading, as the market welcomed the results.
The Strategic Marketing division’s revenue is in-line with expectations, while the Books and Marketing Activation divisions will both beat forecasts. Profits are also in-line with expectations across the group.
St Ives said:
"It remains our view that the issues we encountered in the final quarter were short term and we are encouraged with the progress that is being made to replace the projects which were cancelled."
N+1 Singer Analyst Johnathan Barrett said next year would be very important to the company:
"With FY16 finished we look to FY17 as a confidence builder. At this stage Books looks healthy and wins/activity in Strategic Marketing and Marketing Activation support a normal outlook..."
One negative from the announcement was the update to net debt, £2m higher than forecast, but Singer says this is due to Brexit and the strength in the US dollar, and reiterates it expects the dividend to be secure:
"This is not an issue from our perspective and we expect the dividend to be maintained given strong cover (c2.2x)."
