Back on my hobby horse again... it's a measure of the strange times we're living in that I became terribly excited earlier today when I saw that St Ives' share price had "leapt" 28.75p to 107p. That's an increase of almost 37%. But it remains a travesty that the shares are trading at just over a quid.
Anyway, someone in the City obviously liked what they saw in the year-end results announced this morning, despite the group's caution over the uncertain outlook. But then caution and St Ives go together like stealth taxes and budgets. To use an adjective often favoured in the past by chairman Miles Emley, the group turned in what can be described as a creditable performance overall, managing to maintain underlying operating profit margins at 8% despite a slight slip in gross margins.
A 10% growth in sales from point-of-sale operations and a first full year contribution from Service Graphics helped push group sales up 3.3% to £439.1m, despite a fall-off in sales elsewhere, while underlying pre-tax profits rose by the same percentage to £31.1m
We'll have to wait for the next set of figures to see the impact of the high-profile contract wins with Royal Mail and Sainsbury's. But there's a hint that such wins could see St Ives choosing to replace other, "less beneficial", elements of its work mix in favour of work for its contracted customer base.
Evidence of how tough things are in commercial print and direct mail is made clear by the fact that, while performance improved, the group still made a small (ie less than seven figures) loss on circa £100m of sales in this sector. Point-of-sale demand is described as buoyant, not least I imagine due to a surge in demand for "massive reductions, please please please come in and buy something" signage from retailers desperate to shift stock and get consumers into their stores.
Books continues in its traditional role as the golden child of the group, even managing to offset (almost) the previous year's Harry Potter-based boost by increasing market share through new wins. I'm watching with interest to see where St Ives' dialogue with publishers about a suitable economic model for digital on-demand book printing takes it.
The tough and sometimes unpopular decisions taken in magazines, combined with a focus on shorter runs and titles with demanding service requirements, are proving to be effective. In the face of the oft-mentioned sub-economic pricing from a slew of loss-making competitors, it's no mean feat that the group has managed to maintain the contribution from this part of the business. I would love to be a fly on the wall during the conversations currently being had with publishers fretting about security of supply.
A notable performance came from the ever-shrinking USA business where sales were down almost 20%, but operating profits jumped by 30.5%. The margin in the states is still just 4%, but could this be a nice sweetener for a sell-off?
The short-term picture is, of course, clouded by economic uncertainty. As chief exec Brian Edwards so succinctly puts it, "you need bloody good eyesight" for any semblance of forward visibility in the current market.
