When a Turkish fighter jet shot down a Russian bomber in November, investors in ITE (ITE) must have groaned. The exhibitions group earns more than a third of its turnover in Russia, and the combination of a plunging ruble, the depressed oil price and economic sanctions made it no surprise that like-for-like sales were down 4 per cent in the first half. However, previous acquisitions, cost-cutting and the buyout of an Indian associate drove adjusted operating profits up a tenth to £20.3m.
Comparable sales of floor space fell 5 per cent in Russia and more than a tenth in oil-dependent Kazakhstan and Azerbaijan. Indeed, they slumped 30 per cent at the Moscow International Travel & Tourism event as Turkish exhibitors backed out. Trading in Turkey also suffered due to regional unrest and strained relationships with trading partners. But sales rose sharply in Asia as the group's Chinacoat joint venture posted record attendance figures.
Management slashed the dividend to improve earnings cover. It also revealed that Mark Shashoua - who has spearheaded growth at Ascential-owned (ASCL) i2i Events but was also a director at a group of companies that entered administration in 2009 - will take charge in September. And it remains optimistic, citing £118m in contracted full-year sales and stronger growth forecasts for Russia in 2017. Broker Numis expects pre-tax profits of £37m in the year to September 2016, giving EPS of 10.8p (FY2015: £47.2m and 15.3p).
| ITE (ITE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 148p | MARKET VALUE: | £380m | |
| TOUCH: | 148-149p | 12-MONTH HIGH: | 198p | LOW: 125p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 26p* | NET DEBT: | 70% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 56.1 | 7.8 | 3.0 | 2.5 |
| 2016 | 63.6 | 10.6 | 2.8 | 1.5 |
| % change | +13 | +36 | -7 | -40 |
Ex-div: 9 Jun Payment: 5 Aug *Includes intangible assets of £185m, or 72p a share | ||||
