St Ives has warned of "further deterioration" in trading conditions across its print operations while praising the performance of its burgeoning marketing services division.
In an interim management statement released this morning the company said group sales in the 18 weeks to 1 June were up 6% to £110m, and that overall performance "continues to improve".
Chief executive Patrick Martell said the eurozone crisis was causing customers to delay their spending decisions: "It's not being solved and we can see the affect that's having on markets and consumer confidence. We had expected some improvement in the economy by now, but there hasn't been."
All of its marketing businesses performed well or very well, with the exception of data marketing, where new business was said to be strong but some existing client spend has been delayed or cut back to due to the uncertain economic conditions.
Across its slimmed down print operations the picture was mixed. Margins at book printing operation Clays have been squeezed as publishers move towards ordering shorter runs, more frequently.
The group said its recent investment in a new Timsons/Kodak/Muller Martini digital book production line was expected to mitigate this. The new system is due to start running in the next quarter.
Earlier this year Martell had reported a dearth of additional Olympics-related work, but the group's exhibitions and events wing Service Graphics has now "started to see some increased activity" ahead of the games.
"It's all happening rather at the last minute," he said. "Capacity is going to be at a premium for the next two months in that market."
In point-of-sale business activity in general was described as "strong", but margins are being driven down due to the ultra-competitive retail market.
"Big retailers and brands are under huge pressure and that's forced through the supply chain," Martell said. "The upside is that retailers are running more promotions."
The market for Direct Response print remained "challenging", although the group is considering investing in digital equipment for the operation to improve efficiencies.
St Ives announced it would close its loss-making Westerham Press and Multimedia printing operations in November, and this process has been concluded.
The sale of surplus properties is expected to bring in at least £7m. St Ives expects to finalise the sale of the Crayford site for £3.3m before its financial year-end.
St Ives shares were static in early trading at 68.75p.
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