St Ives weathers the paper storm
The Investment Column
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.
- 1 Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
- 2 Oil tanker with $100 million cargo goes missing off Texas coast
- 3 George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
- 4 Lady al-Qa’ida: On the trail of Dr Aafia Siddiqui, the world’s most wanted prisoner
- 5 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
YouTube video posted by Isis militants shows 'execution of 250 Syrian soldiers'
Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
Oil tanker with $100 million cargo goes missing off Texas coast
George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
- < Previous
- Next >
iJobs Money & Business
Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...
£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...
£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...
£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...