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Why this ASX media share is crashing lower today

The IVE Group Ltd (ASX: IGL) share price has fallen sharply by 10.1% so far today following a negative market reaction to the release of the company’s 1H20 results.

IVE Group provides conceptual and creative design deliverables across print, mobile and interactive media.

Lower revenue in challenging market conditions

IVE Group reported revenue of $360.2 million for the half-year, which was a decline of 4.1% on the prior corresponding period (pcp) of 1H19.

Earnings also fell for the group, with pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) declining by 7.8% to $40.1 million.

Meanwhile, pro forma net profit after tax (NPAT) declined by 7.3% to $17.6 million, while statutory NPAT post AASB 16 came in at $12.4 million.

The group’s free cash conversion to EBITDA was reported to be 67.4% during the half, as IVE commented that expenses such as paper prices and energy remain elevated but stable.

IVE declared an interim dividend of 8.6 cents per share, fully franked.

On a positive note for shareholders, the group noted it had renewed a number of key contracts during the six-month period.

Commenting on IVE’s 1H20 performance, executive Cchairman Geoff Selig said:

“The business continues to execute well on our strategy. This includes consolidating the diverse businesses we operate into the one IVE brand, reaffirming the powerful value proposition we take to market.”

“Our business remains robust and diversified though economic conditions were subdued in the first half which is reflected in these results,” he added.

Outlook for the full year FY20

With regards to IVE Group’s outlook for the remainder of FY20, the group anticipates full-year results to reflect continuing subdued customer activity in some market sectors. This is being driven by ongoing softness in revenues from the retail sector.

In light of the challenging market ahead, the company now expects to deliver full-year pro forma EBITDA in the range of $75 million to $79 million. With this, the group’s gross profit margin is expected to remain stable.

IVE Group noted that its strategy moving forward remains to harness the value from the strategic investments it has made over the last 3 years. This includes its recent acquisition of Salmat Marketing Solutions and Reach Media NZ.

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As of 13/2/20

Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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