Euromoney downbeat as events unit grapples with energy, investment banking woes
Revenues fell 5% in Euromoney Institutional Investor's crucial third quarter as the business media group's events unit faced new pressures from the energy sector on top of a challenging investment banking market.
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A downbeat statement from the FTSE 250 company revealed headline revenues for the three months to June 30 fell by 1% to £105.4m, with underlying revenues, which exclude the impact of currency movements and acquisitions and disposals, fell by 5% largely due to recent weakness in the energy sector.
Subscriptions revenues continued to grow, up 4% at the underlying level, but underlying advertising sales fell 8%, sponsorship fell 9% and underlying events delegates revenues fell 11%.
"The challenging market conditions highlighted at the time of the interim results have shown no signs of improvement," said Euromoney, which is 68%-owned by the Daily Mail and General Trust.
Although it has enjoyed a ray of light from an improving performance in the group's businesses serving the asset management sector, this has been more than outweighed by pressures on the investment banking sector, which account for roughly half the group's revenues, and on fixed income, currency and commodities activities in particular.
Since June, the impact of low oil and gas prices has finally fed through and started to weigh on group activities in this sector, with investment banks having reigned in energy training activity and also hitting smaller events facing this sector.
While the weaker events performance was offset by some timing benefits in the subscriptions businesses, these are expected to reverse in the fourth quarter.
With July and August the quietest trading months of the year but September the most important month for advertising and a big period for events, management were confident that the financial outlook for the current financial year remained broadly in line with expectations - with the exception of the events businesses.
Reading across from global investment banks, the company said it expected the negative trends in bank spending on information, marketing and events to continue for the foreseeable future, with the energy sector also expected to remain weak but asset management business likely to continue to grow.
City analysts were understandably unimpressed, with Numis's Gareth Davies cutting his full year profit before tax forecast by 4% in 2015 and 5% in 2016.
Broker N+1 Singer's PBT expectations were eased by around 5%, while Westhouse said that while downgrades "seem likely this morning... we do not expect this to play well in share price terms against an already stretched valuation".