4Imprint Regulatory News (FOUR)

23 Apr 2009 07:00



4imprint Group plc

Interim Management Statement 

The Board of 4imprint Group plc issues its interim management statement for the period 28 December 2008 to 28 March 2009. Seasonally, the first quarter is the least strong of any quarter of the year, and particularly so for the Direct Marketing Division, which is the largest Division in the Group and in quarter one (Q1) represented 63% of total Group sales.

Group sales for the quarter were £35.72m; 10% ahead of the first quarter last year. At constant currency, sales were 12% lower than in Q1 2008.

Sales performances in each of the three divisions of the Group were as follows:-

(a) End User Division

Q1 sales at £9.92m were 15% lower than Q1 2008. The Manchester based Brand Addition business experienced weak markets carrying into 2009 from the end of last year, and sales were 25% down on Q1 2008. Sales in the Kreyer business were 6% below prior year in sterling and 21% behind in local currency. However, the effect on profitability of these two businesses was partly mitigated by cost reduction actions implemented in the first quarter. Sales in PPI have been maintained at a similar level to prior year.

(b) Trade Division

Q1 sales in the Trade Division, including inter divisional sales, at £3.90m were 19% down on the same period last year, again reflecting the carry through of the weak trading conditions in the final quarter of 2008.  It is particularly noteworthy that the effect of lower sales during the quarter was completely offset by the major cost reduction implemented during 2008. The Division is now able to focus maximum effort on expanding sales in home and export markets.

(c) Direct Marketing Division

Q1 sales for the Direct Marketing Division at £22.4m were 33% ahead of the same period last year. Constant currency sales in North America in Q1 were 3% below Q1 2008. 

(i) North America 

Over recent years, the Direct Marketing Division 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. 

Notwithstanding the weaker trading climate in North America from October 2008 onwards, the Board has elected to maintain this prospecting investment, which is a crucial tool in the sustained growth of this important business. In the current trading climate, however, the yields from this investment have reduced and the effect has been amplified by lower average order values than last year, as customers seek to reduce their own costs. Consequently, profitability has been affected and particularly in Q1, which as stated earlier is seasonally the weakest. Most importantly, however, customer retention patterns from customers acquired during the year, as well as those acquired in prior years, have been maintained and total orders have been similar to those of Q1 2008. The business is thus well positioned to continue to gain market share and pursue its opportunity for strong future growth when the economy improves. 

(ii) UK

Sales continued to grow strongly in this business and were 20% ahead of the same period last year.

Outlook

Trading conditions in our markets continue to look uncertain. However, the Board believes that the range of actions to pursue new sales opportunities coupled with actions already taken to align the cost base and maximise cash flow, should underpin the Group's performance during the coming months.