St Ives (SIV) is reaping the benefits of shelving commodity print products in favour of marketing services. Buoyed by the recent acquisition of three specialist firms, underlying revenue from the marketing services division jumped from £14m to £47m. This segment now accounts for 16 per cent of group operating profit and chief executive Patrick Martell is confident this will increase to 30-40 per cent within two years.
Print services still makes up the bulk of group turnover, but by ditching the production of low-margin company reports and CD/DVD inserts, management has taken steps to protect margins. "We've done the restructuring and now it's time to focus on growth," said Mr Martell. And a key part of the growth strategy is to mix marketing expertise with print. Providing customers with targeted market research has also helped St Ives secure a number of new and long-term print contracts, including J Sainsbury, Royal Mail, HSBC and Heinz.
The arrival of ebook conversion software in November promises to help St Ives' book publishing business, too. Average run lengths have shortened, too, and the new software should help mitigate a shift towards less profitable shorter runs.
Strip out restructuring costs and other exceptional items, and St Ives' adjusted pre-tax profits shot up by an impressive 16 per cent to £24.2m. On the same basis, broker Numis forecasts current-year profits of £26.5m and adjusted EPS of 16.6p (up from 15.6p this year).
ST IVES (SIV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 85p | MARKET VALUE: | £102m | |
| TOUCH: | 84.5-85.5p | 12-MONTH HIGH: | 95p | 65p |
| DIVIDEND YIELD: | 6.7% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 122p* | NET DEBT: | 9% | |
| Year to 27 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 391 | 30.6 | 14.1 | 17.20 |
| 2009 | 387 | -7.2 | -6.1 | 2.25 |
| 2010 | 291 | 13.2 | 10.9 | 3.50 |
| 2011 | 297 | 16.9 | 13.2 | 5.25 |
| 2012 | 329 | 14.9 | 11.6 | 5.75 |
| % change | +11 | -12 | -12 | +10 |
Ex-div: 28 Nov Payment: 21 Dec *Including intangible assets of £118m, or 100p a share | ||||
