Daily Mail share tips: St Ives plc
Company: St Ives plc (Full annual results)
Pre-tax loss: £7.2m vs £30.6m profit in 2008
One-year share performance: -17%
The bulging shelves at WH Smith may suggest otherwise, but the magazine business is in a decline that will continue long past the end of the recession.
That's the grim assessment of Patrick Martell, chief executive of St Ives, the company that prints everything from Vogue to The Economist.
It's not that consumers are no longer interested in what magazines offer, more that advertising is being increasingly lured to the internet, particularly in the area of classified ads.
St Ives is battling declining circulations, falling page numbers and magazine closures.
Martell said this 'structural not cyclical' change means St Ives expects its magazine business to continue to shrink.
In ordinary times that would pose a simple rebalancing challenge because about 60pc of St Ives' overall revenue comes from its commercial printing division, which produces promotional material for retailers and other corporate clients.
The problem for Martell is that the recession has increased capacity and com-petition and led to a severe erosion of profit margins across the sector.
This was St Ives' first loss since listing in 1985 and despite a strong balance sheet and underlying profitability there is little to suggest that the headwinds will abate.
VERDICT: Avoid
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