UBM’s cautious forecasts spooks investors

UBM, the events organiser that owns PR Newswire, has disappointed investors by forecasting that its operating profit margin may fall in 2013 even after it disposed of underperforming businesses.

The FTSE 250 company, which last month sold its data services businesses for £160m, has transformed itself over the past year to focus on exhibitions and trade shows.

It reported revenues from continuing operations rose 2 per cent to £798m in 2012 and said adjusted operating profits, which exclude one-off charges, increased 1.6 per cent to £177m.

Shares in the company fell 4.65 per cent to 738p on Friday as investors were spooked by UBM’s cautious forecasts for the coming months.

“It’s all about the guidance that the management gave,” said Patrick Yau, media analyst at Peel Hunt. “It has undermined our confidence.”

The group predicted its adjusted operating profit margin would be in the range of 21-23 per cent in 2013. At 22 per cent, the midpoint of the forecast was lower than analysts had expected and weaker than last year’s margin of 22.2 per cent.

UBM forecast underlying revenue growth of 3-7 per cent in 2013. That compares to underlying growth of 6 per cent in 2012.

Robert Gray, chief financial officer, said the forecasts were deliberately wide ranges to cover all potential eventualities over the coming months and would be narrowed as time went by.

To reduce its exposure to magazine-based advertising revenue, the group has sold or shut down 44 print titles since the start of 2012, including Farmers Guardian and Pulse.

David Levin, chief executive, said that following the disposals, UBM was developing as an “events-led marketing services and communications business”.

Events now account for 55 per cent of UBM’s total continuing revenue and 74 per cent of total adjusted operating profit, making it one of the world’s biggest events groups.

Mr Levin outlined plans to generate new revenue from advertising-funded websites built around its portfolio of events, 100 of which generate more than £1m apiece.

UBM has now built 34 “community websites”, up from 11 a year ago, each of which are based on a specific theme such as Future Cities or Oncology. The sites allow users to post their own content and are curated by a small team of editors and paid contributors.

The company’s 45 remaining print products continued to decline, with underlying revenues falling 17 per cent in 2012.

PR Newswire, a tool for issuing announcements, grew its revenues 4.6 per cent to £196.4m, with adjusted operating profits of £43.5m