St Ives weathers the paper storm

The Investment Column

St Ives continues to shine like a beacon above the rest of the printing industry. Its unflinching commitment to investment throughout the recession has seen it pump pounds 125m into the business over the past five years, all financed from internal cash flow. That is in stark contrast to others in the industry who have been forced to raise cash or undertake a seemingly continuous process of restructuring.

The fruits of St Ives' investment policy came through in half-year results showing profits raised a healthy 25 per cent to pounds 19.6m in the six months to 26 January.

The figures included a maiden contribution of pounds 1.31m from Johler Druck, the German printer of newspaper inserts and other direct response advertising material acquired in a pounds 19m deal last September. No skeletons have been uncovered in that particular cupboard, which represents St Ives' first foray into the continental market for these products.

But despite results which beat many expectations, the market reacted by marking down the shares by 5p to 469p.

St Ives is the UK's leading book printer, with around a fifth of the market, and there had been worries about the impact of the collapse of the net book agreement last year. Those now seem unfounded, as the group appears to have weathered the squall, with sales in the half year ahead in both hardback and paperback books.

More serious were delays and start-up problems with new printing presses at Caerphilly. The difficulties, combined with some caution amongst publishers after paper prices rose, hit profits in magazine printing. Nonetheless, the group has maintained volumes, winning several new titles such as Loaded, Marie Claire and Goal.

The rest of the business has continued to grow. The increase in bids and deals in the City fuelled first-half growth in security printing, where St Ives is a leading player, and the booming stock market bodes well for the future. But the main boost to the group's profits came from direct response and the new multimedia cassette sleeves to CD-Rom printing operation. The market for the former is expanding at around 5 per cent a year.

Net margins at the group appeared to slip a touch to 11.6 per cent in the first half, but in reality this reflects the increase in the direct marketing business where paper costs are borne by the printer rather than the customer, as in traditional printing. In reality, underlying margins are now close to St Ives' peak level of 15 per cent.

Given its strong market position in most areas of the home market, St Ives is increasingly going to have to look abroad for growth. With capital expenditure expected to fall from around pounds 48m to pounds 30m in 1996, net cash could be back up to pounds 29m by the year end, giving the group plenty of firepower. Henderson Crosthwaite's full-year profit forecast of pounds 43.5m suggests a forward multiple of 16 for the shares. A fair rating for such quality.

Start your day with The Independent, sign up for daily news emails
Life and Style
love + sex
Arts and Entertainment
Victoria Wood, Kayvan Novak, Alexa Chung, Chris Moyles
tvReview: No soggy bottoms, but plenty of other baking disasters on The Great Comic Relief Bake Off
Sport
Ashley Young celebrates the winner for Manchester United against Newcastle
footballNewcastle 0 Man United 1: Last minute strike seals precious victory
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
Arts and Entertainment
Seth Rogan is one of America’s most famous pot smokers
filmAmy Pascal resigned after her personal emails were leaked following a cyber-attack sparked by the actor's film The Interview
News
Benjamin Netanyahu and his cartoon bomb – the Israeli PM shows his ‘evidence’
people
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
80s trailblazer: comedian Tracey Ullman
tv
News
i100
Life and Style
A statue of the Flemish geographer Gerard Kremer, Geradus Mercator (1512 - 1594) which was unveiled at the Geographical Congree at Anvers. He was the first person to use the word atlas to describe a book of maps.
techThe 16th century cartographer created the atlas
Arts and Entertainment
Stephen Tompkinson is back as DCI Banks
tvReview: Episode one of the new series played it safe, but at least this drama has a winning formula
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Christine McCleave: FP&A Analyst

£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
Leonora Carrington transcended her stolid background to become an avant garde star

Surreal deal: Leonora Carrington

The artist transcended her stolid background to become an avant garde star
LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

Education: LGBT History Month

Pupils have been discussing topics from Sappho to same-sex marriage
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

Cricket World Cup runs riot to make the event more hit than miss...

The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot