Russia's invasion of Ukraine and the ensuing economic sanctions were a nightmare for ITE (ITE), which earns the majority of its revenues and profits in the world's largest country. The organiser of London's 'Scoop' fashion show and Mumbai's 'World of Metal' exhibition continued to struggle in the first half, but early signs of progress led investors to bid its shares up 4 per cent on results day.
Geopolitical pressures, combined with a £16m top-line hit from currency shifts and the absence of key biennial events, sent ITE's first-half operating profit down a fifth to below £10m. Even excluding currency and biennial effects, volume sales slumped by a fifth in Russia and 15 per cent overall.
ITE's strategy has centred on hedging its exposure to Russia and Ukraine. Its joint ventures in India and China posted good growth, and it splurged more than £54m on the acquisitions of Africa Oil Week, Eurasia Rail and Breakbulk, which organises specialist cargo handling shows. Management also slashed administrative spending by 13 per cent to about £17m.
Management doesn't predict an upturn in Russia or Ukraine this year. Indeed, macroeconomic and competitive pressures drove volumes down 40 per cent at the key Mosbuild construction show in April, while underlying booked revenue is tracking 12 per cent behind last year.
Nonetheless, signs of stabilisation in Russia prompted broker Numis to raise its forecasts. It expects full-year pre-tax profit of £46.2m, giving EPS of 15.3p (from £60.3m and 20.2p in 2014).
| ITE (ITE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 197p | MARKET VALUE: | £506m | |
| TOUCH: | 195-197p | 12-MONTH HIGH: | 248p | LOW: 125p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 32p | NET DEBT: | 56% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 71.2 | 12.2 | 4.3 | 2.5 |
| 2015 | 56.1 | 7.8 | 3.0 | 2.5 |
| % change | -21 | -36 | -30 | - |
Ex-div: 25 Jun Payment: 6 Aug *Includes intangible assets of £154m, or 60p a share | ||||
