Headwinds still blowing
Euromoney Institutional Investor (L:ERM)'s Q1 update shows trading conditions remaining challenging, with the poor start to the year in equity markets added to the mix. Subscription revenues are still growing (up 2% at constant currency), but the continuing depressed oil price is showing through in lower delegate revenues. Currency has clearly swung in the group’s favour and the cash performance remains strong. The capital markets day, when new CEO Andrew Rashbass will present the strategy update, is now six weeks away and the shares are likely to mark time in the meantime.
Markets difficult, currency helpful
The issues surrounding confidence in banking markets have been well rehearsed and the impact of weak commodity markets is also built into market consensus. The revenue from Delegates is bearing the brunt of the low energy prices (down 19% at constant currency in Q1), while advertising continues to drift as expected. The activities addressed at the asset management markets have been much more resilient to date, primarily coming through in subscription revenues. Should equity markets remain weak, there may be some further impact down the line, although the recent strength of the US dollar will be helpful in buoying revenues, with a translation effect at the operating profit level of £0.6m for every one cent movement. We have only made minor adjustments to our numbers on the back of this statement, with a small (2%) reduction in revenue, but maintaining our profit projections, which were previously at the lower end of market range.
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