Solid result at IVE with $76m profit
The Covid-19 crisis saw diversified marketing services group and heatset print giant IVE take a 6.6 per cent hit on EBITDA, on revenue down by 4.4 per cent to $691.5m, with NPAT coming in at $32.6m for the 2019-20 financial year.
Behind the headline figures, the annual results show a business that moved swiftly to mitigate against the impact of coronavirus as customers cut marketing budgets with labour reductions and stand downs, pay cuts for senior execs, a move into manufacturing of PPE, and the postponement of investments, all resulting in a solid result for the year.
IVE Group CEO, Matt Aitken said: “IVE entered the Covid-19 crisis in a position of strength, with the company responding very well on all fronts to the unprecedented and volatile operating environment.”
Its $691.5m FY2020 revenue was $32.1m lower than the previous year, although it was boosted by $50m from Salmat Marketing and Reach NZ which it acquired in January, without this revenue would have been a full $82m lower than last year.
Underlying EBITDA from continuing operations was $5.4m lower than the previous year at $76.6m. IVE managed to keep its EBITDA margin, it came in at 11.1 per cent, a sliver under the 11.3 per cent from last year. Its cash position is strong with $51.6m at the bank at the end of June, and that figure which is now $5m higher still. Debt was reduced by $36.9m to $137.1m.
IVE was hit with what it says were “meaningful reduction in catalogue production and letterbox distribution for a number of our retail customers”, and was also hard hit by a reduction in activity across its tourism and entertainment sectors. It was also faced with a significant reduction in publishing printing, as magazines were shelved, closed or printed with reduced paginations.
It saw solid revenues in its not-for-profit work, and its data driven communication business “remained strong”.
The retail sector remained the company's biggest revenue stream, with $300m coming in, financial and corporate services generated $102m, publishing $55m.
Cost reductions to deal with Covid included voluntary pay cuts at the top of the business, with board members including executive chairman Geoff Selig taking a 50 per cent pay cut, while senior execs including CEO Matt Aitken and CFO Darren Dunkley took a 25 per cent cut, with a number of staff also having remuneration reductions.
IVE moved quickly at the onset of the pandemic with many levers being pulled in order to adjust the business to changes in the market. Some workers were stood down, overtime was reduced, with casual and temporary staff numbers also reduced. Redundancies occurred at Salmat, and through the integration of all the company's brands into IVE as part of a national restructure, and from the reshaping of the DDC business.
Geoff Selig, executive chairman of IVE told Print21 that, "As the volatility in the market grew so did our response. It is always a challenge to align capacity with demand. We've done a good job in a difficult environment. Our fundamentals are strong."
Praising his staff Selig said: “Notwithstanding the extent and speed with which the Covid-19 crisis impacted their personal and professional lives, our entire workforce of 1700 staff responded together as one. They committed to do whatever was required to maintain a safe workplace, and ensure we continued delivering high levels of service to our clients. Under the circumstances, I don’t believe we could have responded any better to the impacts of Covid-19, and I thank our leadership team and all of our staff for their efforts and commitment during the year, particularly the last six months. I am very pleased with the performance of the business over the last year and the underlying strength of our financial position.”
For the current year the company says its EBITDA guidance is that 2020-21 will be similar to the 2019-20 year, with margins at a similar level. It says it will be resuming dividends in the first half. Its net debt will be reduced by another $27m, to $110m.
IVE will see the Australia's biggest print job, the seven million weekly Coles catalogue, have its circulation slashed to a fraction of its current run length next month, with the last letterbox issue to be printed on 9 September before it goes instore and online only. IVE does not expect to qualify for the second round of JobKeeper beginning at the end of September.
Looking ahead CEO Matt Aitken said, “The company remains well capitalised, highly liquid, and confident that we are ideally placed to maintain our strong market position as we emerge from this period of uncertainty and disruption”
The financial markets broadly welcomed the IVE result, its stock price rising by 7 per cent this morning.