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23 Apr 2009 07:00
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4imprint Group plc
Interim Management StatementΒ
The Board of 4imprint Group plc issues its interim management statement for the periodΒ 28 December 2008Β toΒ 28Β March 2009. Seasonally, the first quarter is the least strong of any quarter of the year, and particularlyΒ so for theΒ Direct Marketing Division,Β which is the largest Division in the Group andΒ in quarterΒ oneΒ (Q1)Β representedΒ 63% of total Group sales.
Group sales for the quarter were Β£35.72m; 10% ahead of the first quarter last year. At constant currency, sales were 12% lower than inΒ Q1Β 2008.
Sales performances inΒ each ofΒ the three divisions of the Group wereΒ as follows:-
(a) End User Division
Q1Β salesΒ at Β£9.92m were 15% lower than Q1 2008. TheΒ ManchesterΒ basedΒ Brand AdditionΒ businessΒ experienced weak markets carrying into 2009 from the end of last year, and sales wereΒ 25% down on Q1 2008.Β Sales inΒ theΒ KreyerΒ businessΒ wereΒ 6% below prior year inΒ sterling and 21% behind inΒ localΒ currency.Β However, the effect on profitabilityΒ of these two businessesΒ wasΒ partlyΒ mitigated by cost reduction actions implemented in the first quarter. Sales inΒ PPIΒ have been maintained at a similar level to prior year.
(b) Trade Division
Q1 sales in the Trade Division,Β including interΒ divisional sales,Β atΒ Β£3.90mΒ wereΒ 19% down on the same period last year,Β againΒ reflecting theΒ carry through of the weak trading conditionsΒ inΒ the final quarter of 2008.Β Β It is particularly noteworthy that the effect of lower sales during the quarter was completely offset by the major cost reductionΒ implementedΒ during 2008.Β The Division is now able to focus maximum effort on expanding sales in home and export markets.
(c) Direct Marketing Division
Q1Β sales for the Direct Marketing Division at Β£22.4m were 33% ahead of the sameΒ periodΒ last year.Β Constant currency sales in North America inΒ Q1Β were 3% below Q1 2008.Β
(i)Β North AmericaΒ
Over recent years, theΒ Direct Marketing DivisionΒ has grown rapidly as the Board pursued a strategy of aggressive investment in new customer acquisition through the expansion and development of internet and print marketing techniques.Β
Notwithstanding the weaker trading climate inΒ North AmericaΒ from October 2008 onwards, the Board has elected toΒ maintainΒ this prospecting investment,Β which isΒ a crucial tool in the sustained growth of this important business. In the current trading climate,Β however, the yieldsΒ from this investment have reduced and the effect has been amplified by lower average order valuesΒ than last year,Β as customers seek to reduce their own costs. Consequently, profitabilityΒ has been affected and particularly in Q1,Β which as stated earlier is seasonally the weakest. Most importantly,Β however,Β customer retentionΒ patterns fromΒ customers acquired during the year,Β as well as those acquired in prior years,Β have been maintained and total orders have been similar to those of Q1 2008.Β The business is thus well positioned to continue to gain market share and pursue itsΒ opportunity for strong future growthΒ whenΒ the economy improves.Β
(ii)Β UK
Sales continued to grow strongly in this business and were 20% ahead of the same period last year.
Outlook
TradingΒ conditionsΒ in our marketsΒ continue to look uncertain. However, theΒ BoardΒ believes that the range of actions to pursue new sales opportunitiesΒ coupled with actions already taken toΒ alignΒ the cost base and maximise cash flow,Β should underpin the Group'sΒ performanceΒ during the coming months.Β Β
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