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Ascential shares tumble as media group swings to a loss

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Ascential shares tumble as media group swings to a loss after China lockdowns hindered e-commerce arm

  • The London-based information services provider posted a £38.4m half-year loss
  • Ascential shares were the third-biggest faller on the mid-cap FTSE 250 Index
  • Double-digit percentage sales growth was seen across all of the firm’s divisions

Ascential shares dived on Monday after the firm plunged to a loss, despite growth across all segments of the business.

Having recovered to a profit of £216.8million within the six months ending June last 12 months, the London-based media company posted a £38.4million loss this time around. 

Ascential shares plunged by 11.8 per cent to 257.6p by the late afternoon, making it the second-biggest faller on the FTSE 250.

Revival: The return of individuals to the creative arts festival Cannes Lions boosted revenues in Ascential’s marketing division by 88 per cent to £80.8million

It blamed economic uncertainty, the choice by Amazon to maneuver Prime Day to July and provide chain pressures exacerbated by severe lockdown restrictions in Shanghai for hitting trade in its digital commerce division.

Total sales inside the segment still expanded by 59 per cent to £95.1million, but margins were held back by a one-off £31.4million impairment charge related to its Edge Digital Shelf analytics platform.

Margins were also stretched by investment outpacing revenue growth after the group bought software developer Sellics and e-commerce services provider Intrepid as a part of plans to expand its reach in Germany, the US and Southeast Asia.

Nonetheless, chief executive Duncan Painter hailed the firm’s results, with double-digit percentage sales growth across all divisions and profits according to forecasts, which he said were ‘all of the more pleasing given the difficult macro backdrop’.

Ascential saw a substantial boost from the physical return of two major events; the creative arts festival Cannes Lions and the European edition of fintech exposition Money20/20.

Each events were cancelled in 2020 following the emergence of the Covid-19 pandemic and the next restrictions on cross-border travel and in-person events implemented by governments.

Their staging this 12 months was extremely popular, with each seeing their turnover and earnings exceed pre-pandemic levels.

Cannes Lions helped to spice up revenue in Ascential’s marketing arm by 88 per cent to £80.8million, as did a healthy growth in subscription rates within the group’s World Retail Congress business.

Growth was further achieved in the corporate’s product design division, where demand for non-fashion products, similar to beauty and consumer technology, drove record growth in turnover and customer retention rates.

Analysts at Berenberg said the corporate’s trading update ought to be ‘taken positively given weakness seen across many e-commerce platforms of late raising concerns over its outlook.’

‘All divisions are performing well on the highest line, with digital commerce clearly taking market share and the recovery in events revenue very strong also.’ 

Even with the present economic risks, bosses on the firm said that its businesses ‘remain well set for the 12 months, underpinned by high levels of digital and subscription revenues and multiple growth levers. 

‘Our ability to execute our strategy, combined with structural growth in our end markets and the success of our marquee events, underpins the board’s continued confidence in our prospects for future success.’ 

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