If books, magazines and newspapers are increasingly being replaced by digital equivalents, what's a printing firm to do?
In the case of St Ives, the answer is to move more of its business into providing businesses with marketing services such as data management and research. It sold its loss making magazine business in April, reducing its exposure to commodity printing, and has made a number of acquisitions - Tactical Solutions, Response One and Pragma - to boost its services division, with more to come. Chief executive Patrick Martell said:
We remain focused on using our strong financial position [cash of £16.3m at the year end] to acquire businesses and invest to reinforce our enhanced marketing services offering.
The company has reported a 1.8% rise in full year revenues, with profits up 28.3% to £16.9m. Print - including producing bestsellers such as One Day by David Mitchell and Life and Laughing by Michael Macintyre - currently accounts for the bulk of the company's profits. But within the next three years it aims to have 30% to 40% coming from the marketing services division.
Meanwhile it is investing in digital print and print-on-demand, where customers produce physical books in smaller quantities, deliver them directly and minimise the risks of holding unsold stock.
In a falling market the company's shares have jumped 5.25p to 74.25p, and Singer Capital Markets said:
St Ives has beaten expectations and has maintained guidance for 2012. In the current climate this is encouraging and will give the business further time to rebalance its exposure and develop its marketing services offerings. The shares have eased ahead of the figures but should respond to no reduction of guidance and good development.
Overall we don't expect consensus expectations to change based on current trading trends and the rapid development of the marketing services related areas of the business. In print, trading conditions remain extremely difficult due to cyclical pressure and structural change.
