Incepta warns on full-year profits

Incepta, the media group that owns the City spinmeister Citigate Dewe Rogerson, issued a bleak assessment of the advertising market yesterday as it warned full-year profits would fall short of expectations.

The company, which has been hit by the slowdown in the financial markets, said visibility remained "weak" and that there was no evidence of trading conditions improving this year. The warning sent shares in Incepta, which have fallen by more than one-third since April, tumbling 9 per cent to 19.5p.

In a trading update issued ahead of interim results next month, Incepta said the current economic climate continued to be "tough" for the industry. It added that lack of visibility had been "exacerbated by the continuing low levels of the market and investor confidence".

Analysts slashed 15 per cent off their full-year forecasts for the group from about £24m to £20.5m. "There is no end of the malaise they are currently in," Hector Forsythe, at Evolution Beeson Gregory, said.

"Current indications do not provide any evidence of a significant improvement in market conditions in the near term," Incepta added.

The group, which specialises in marketing, public relations and advertising and trades as far afield as the US and Asia, has suffered from a lack of corporate activity as crashing stock markets have forced companies to pull or postpone initial public offerings.

While Citigate Dewe Rogerson, its London-based financial public relations firm, handled the successful flotation of Punch Taverns, albeit after the first attempt was pulled because it was pitched too high, it was forced to abandon the £2bn flotation of the Yellow Pages business Yell a month later.

Incepta said that trading in continental Europe, where its business is dominated by Germany, was weaker relative to the UK and the US. Mr Forsythe said the company had borne the brunt of Deutsche Telekom's recent decision to cut its marketing budget, which would result in less work for Incepta's German subsidiary.

The group pointed to its marketing services businesses, which it said were still trading strongly, as the sole bright spot amid tough conditions. It also said its US technology public relations business, decimated by the collapse of the dot.com boom, had returned to profit and added the group remained financially strong. "Interest cover remains very comfortable and we have significant headroom remaining in our committed bank facility," it said.