St Ives sinks into the red with £7m losses

BRITAIN'S biggest printing firm was caught in a sea of red ink yesterday as it posted annual losses of more than £7 million and warned of "significant challenges" ahead.

St Ives, whose clients include publishing giants Penguin, HarperCollins and Bloomsbury, has been hit by lower demand for commercial and consumer printing in the recession, as well as by advertisers moving to the internet.

The company, which has off-loaded its US and Dutch businesses, said it cut about 400 jobs during the year to 31 July.

Annual pre-tax losses amounted to some 7.2m compared with a 30.6m profit a year earlier.

Profits from continuing operations before exceptional items slumped to 7.3m from 29.5m despite revenues dipping just 1 per cent to 391.2m.

Shareholders are set to pocket a final dividend of just 0.5p, taking the total dividend for the year to 2.25p, down 87 per cent from last year's 17.15p.

Chief executive Patrick Martell said: "The outlook for the markets we supply remains uncertain and will continue to be impacted by both the current economic climate and structural changes that have been accelerated by the recession."

St Ives, which employs about 3,400 staff, also suffered when its supply chain was disrupted by the collapse of books wholesaler EUK – owned by Woolworths – in the run-up to last Christmas.

The firm is printing top-selling titles including Dan Brown's Da Vinci Code follow-up, The Lost Symbol, but said hardback book revenues fell 6 per cent on the previous year after the EUK disruption. This, along with magazine closures, lower numbers of pages and intense competition from rivals, hit underlying profits at its media arm.

Royal Bank of Scotland analyst Justin Jordan said St Ives was in better shape following the disposal of the US and Dutch businesses as well as a management shake-up. "The new management team have closed plants and reduced head-count, delivering estimated cost savings of over 6m per annum," he said.

"Whilst the outlook remains uncertain, with end markets remaining highly competitive, St Ives is financially secure."

The firm said it would continue to review its businesses and look to cut costs while expanding products and services. Further job cuts could not be ruled out, Martell added, though none are planned in the short term.

Revenues in the new financial year are expected to be marginally lower, but the chief executive said he was comfortable with City forecasts for pre-tax profit of about 8m to 9m.

The group, which has renegotiated its banking facilities, said it was in a robust financial position and would take advantage of acquisition opportunities as they come. St Ives is based in London and operates UK sites at locations including Leeds, Bradford, Blackburn, Edenbridge and Bungay.