Mixed picture for St Ives half-year results

Operating profits from St Ives’ Strategic Marketing business have now grown to 56% of the group’s underlying profit. However costs associated with its string of acquisitions, along with restructuring charges, have resulted in a £5m loss in its first half.

In the six months to 29 January sales at the group increased by 6% to £185.7m. Underlying operating profit was up 5% to £16.1m.

The net loss for the period was £5.2m once £18.5m of ‘non-underlying’ expenses was taken into account, including restructuring costs of £3.3m and £14.9m of acquisition costs. 

The charges included a £1.7m loss on the disposal of properties and equipment in Bradford (the former St Ives Direct operation) and Birmingham.

St Ives share fell by 8%, or 18.8p, to 219.7p in early trading after the news.

Sales at the group’s Strategic Marketing division were up 36.9% to £69.4m, while underlying operating profits in that part of the business rose by 36.6% to £9.7m.

Within that there was a big jump in digital activity, and St Ives chief executive Matt Armitage said the business now had 800 employees worldwide working on digital marketing solutions. The group cited a number of important client wins and said its Realise business had been tasked with building a sales enablement platform for HP.

Marketing Activation, which includes print operations SP Group and Service Graphics, print management wing St Ives Management Services, and field marketing specialist Tactical Solutions, posted sales down 9% at £80.2m. Underlying operating profit fell by a fifth to £4m.

St Ives had already warned about the impact of tough trading in the grocery sector on SP. It had made finding new business for the operation a priority, and said it had had some success, with new wins including Triumph, Piaggio, Berkeley Homes and Henkel.

The group was also forced to write off £2.5m against the book value of Tactical Solutions, after the loss of major customer Heinz. St Ives acquired Tactical in 2011 in a £24m deal.

At book printing operation Clays, margins were down from 12.4% to 10.2% after underlying profits fell from £4.5m to £3.7m. Sales were more or less flat at £36.1m.

Clays has not yet benefited from its major contract win with Penguin Random House, which involved significant upfront costs readying the operation to take the work on. The last tranche of PRH work transferred over in January.

The company has also won new work from Cambridge University Press in collaboration with SIMS, as well as Oneworld Publications and Oxford University Press.

St Ives made its biggest marketing buy yet last month when it acquired The App Business in a deal worth up to £55m.

The group’s net debt as at 31 July 2015 was up £19.3m at £82.1m. 


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