Shares drop but Communisis confident for full year

MARKETING and printing group Communisis said it is on a path to sustainable growth, as it reported growing sales but flat profits.

The Leeds-based group is emerging from a tough spell when it was forced to restructure and refocus.

But shares fell almost 13 per cent to 25.25p as the group's pre-tax profits for the first six months of the year came in flat on a year earlier at 1.8m. Operating profits increased six per cent to 2.8m and revenues gained three per cent to 98.1m.

Sign up to our Business newsletter

Sign up to our Business newsletter

"Having set out our shop and addressed some of the continuity issues, for me and the management team, it is all about growth, and how far and how fast can we go," said chief executive Andy Blundell.

"Looking forward with two months' trading under our belt we are quite confident for our full year."

Communisis suffered in 2009 as recession, meltdown in the financial sector and a sharp fall in bank marketing hammered profits and sales.

Its Leeds Direct Mail business, which employs about 500 people, was particularly hard hit with around 50 job cuts when it shut three print lines.

But Communisis said with cost cuts in Leeds largely complete, it is focusing on improving the plant's workflow.

"It (Leeds) is absolutely vital in terms of our specialist output capability," said Mr Blundell. "But it's a business which has changed significantly. We cannot be Luddite about that because the marketing services area is a fast-moving market."

Communisis did not see quite the level of bounceback it hoped for from financial services, delaying the pace of recovery in direct mail. Mr Blundell said: "A lot of businesses are still concerned about the relative fragility of the economy and their expansion plans are an obvious place to say 'we will put something off' (such as) a break on marketing plans."

It sees volumes of direct mail continuing to decline, as companies embrace smaller, more targeted mailouts which are less likely to be discarded by customers as junk mail.

It hired new sales staff at Leeds, and said this helped it recover market share in areas such as the mutual sector.

Its intelligence-driven communications arm, which uses data for a wide range of marketing campaigns, grew profits and sales strongly and was the group's main growth engine during the period.

Across the business, Communisis won new work with firms including Tesco supermarket.