The PLC’s shares tanked on the news, falling by 46%, or 105.25p, to 120p in trading this morning.

St Ives said that the outlook for the final quarter of trading this year, and for the following financial year had “deteriorated”.

It said global economic uncertainty had caused clients in its Strategic Marketing division to cancel or defer “a number of significant projects”.

“We are implementing targeted cost saving measures where appropriate but will not do so if this results in long-term damage to the business,” the group said in a statement.

St Ives made its biggest marketing buy yet in February, when it acquired The App Business in a deal worth up to £55m that also involved the group issuing £13.8m of new shares and taking on a further £10m of debt.

At the half-year the group posted a £5.2m loss on sales up 6% to £185.7m.

In a statement, chief executive Matt Armitage said: "It is disappointing to have to report this marked deterioration in the near-term outlook, but we remain clear on our long-term growth priorities and have the financial strength to continue to support our strategic ambitions.

“We continue to believe there is further scope to expand our higher margin Strategic Marketing activities both organically and through acquisition, and to invest in our growing international operations and client offerings in the US and Asia."

At St Ives’ Marketing Activation operation, which includes print businesses SP and Service Graphics, sales are down by circa 11% and margins continue to be squeezed due to “increasing price pressure”. Since the end of last year St Ives has been working to reduce SP’s reliance on the hugely competitive grocery sector, but it said it would take time for any benefits to flow through.

Turnover is also marginally lower at Books division Clays, down 1% on last year. St Ives said that the new business gained from its big contract win with Penguin Random House had been offset by “volume reductions caused by de-stocking” as well as a movement of some work overseas. “In addition, the costs associated with transitioning the Penguin Random House contract have continued to adversely affect operating margins,” it said.

One industry observer said: “The downturn in Marketing Activation and Books has been well flagged in previous announcements but the slowdown in Strategic Marketing is a shock and the market has reacted accordingly. St Ives had put all its eggs in this basket for growth, and the basket appears to have a hole in it. The debt taken on to fund the acquisition spree in Strategic Marketing may soon prove troublesome.”

St Ives’s net debt at the end of its last financial year grew by £19.3m to £82.1m.

Armitage was unavailable for further comment at the time of writing.