Tangent shares fall to new low on trading update
Wednesday, February 11, 2015
Shares at Tangent Communications have fallen to a 52-week low after the firm axed its final dividend and warned on profits for the full year.
In a trading update released this morning (11 February) the £27m turnover group cited a slowdown in trading at its Goodprint and Ravensworth operations.
Its shares fell by 1.12p or 23% to 3.75p, a 52-week low, on the news.
Despite an anticipated 20% increase in sales at Printed.com, underlying operating profit for the year is now expected to be £1.2m, a 50% decrease on last year.
When Tangent acquired online business card specialist Goodprint for £10.2m in 2012 the Goodprint business alone made a £1.2m operating profit on sales of £4m.
Full-year sales at Goodprint, where “recovery has not been forthcoming” are now expected to be £2.3m, a 28% fall on last year.
Tangent also said that “diseconomies of scale” particularly in its work for estate agents, had worsened following low sales over the Christmas period. Trading at Ravensworth has slowed since November, which Tangent attributed to a softer housing market.
It has spent £700,000 restructuring its Newcastle site as a result, and on unspecified moving costs.
The group added that the coming year for Ravensworth will be framed by uncertainty in the run-up to the General Election in May, and the subsequent result.
“We look to our online print businesses to fill capacity in the future but in the short-term operating margins will remain lower,” Tangent said in a statement.
The group said sales at T/OD (Tangent On Demand) were in line with expectations and likely to be up around 4% year-on-year at £2.6m (2014: £2.5m).
Its agency operation Tangent Snowball, which was restructured in the first half of the financial year, is now “performing better as a leaner business” although Tangent also said it would take a further six months for the benefits of its restructuring actions to flow through.
The firm also launched Wrap.me, a new personalised giftwrap service aimed at consumers before Christmas, although there was no specific update on how this had performed.
Tangent’s financial year runs to the end of February, and it will release its full-year results in May. It said it expected to have net cash of £1.4m at the year-end.