St Ives upgraded on strong results

St Ives, the specialist printer now reclassified as a media stock, comfortably beat market forecasts for the six months to 29 January, earning a re-rating from the City and a 10 per cent jump in the share price yesterday.

Turnover increased by 24 per cent to pounds 223m, while profits rose by 13 per cent to pounds 27.3m. Much of the increase in sales and perhaps half the extra profit came from Hunters Armley, the direct-response printer acquired for pounds 33m last June.

A drop in margins was also chiefly due to the inclusion of Hunters Armley, which further increased sales of paper included virtually at cost in leaflet printing contracts, chairman Miles Emley said yesterday.

Results in the UK exceeded expectations, with sales rising by around 5 per cent on a like-for-like basis. All divisions contributed, including direct response advertising, magazine and book printing, financial reports, and printing for the music and multimedia industries.

The group continues to benefit from its strong market share, continuing investment in new equipment and the flexibility permitted by its wide range of operations.

The chances of a soft landing for the economy are improving and new plant is being brought on stream in the US to ease capacity constraints, but the outlook in Germany remains clouded by fierce competition and slow growth, St Ives said.

The company is still looking out for acquisitions, especially in North America, but the task of rationalising Hunters Armley still has some way to go, Mr Emley said.

The switch from the defunct paper and publishing sector to media should lead to a re-rating of the shares and a rise in the number of analysts following the company, but the shares continue to suffer from the concentration of institutional investors on FTSE 100 companies, group managing director Brian Richards said.

Analysts began upgrading forecasts yesterday, with Alastair Irvine of Merrill Lynch raising his expectations for the current year to the end of July from pounds 53m to pounds 56m and earnings of 37p, rising to pounds 60m and 39p in 2001.

The shares have rallied steadily for six months; they jumped another 50p to 530.5p yesterday, which is a fairer reflection of their value.