Euro concerns weigh on ITE Group

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Analysts raised their full-year pre-tax profit forecasts for ITE Group, in spite of growing concerns over the exhibition-organising company’s heavy exposure to the euro.

The FTSE 250 company, which specialises in staging exhibitions in the former Soviet states but books most of its revenues in euros, on Monday reported pre-tax profit for the six months to April up from £3.5m to £6.3m year on year.

Although the figures encouraged analysts to increase their full-year pre-tax profit forecasts by 1 per cent to £52.5m, the group’s exposure to the single currency held back more substantial upgrades.

ITE earns 60 per cent of its revenues in euros, and its recent slip – on the back of a double-dip recession in Spain and Greece’s political turmoil – is expected to weigh on ITE’s full-year figures.

“If the euro stays around €1.25 to £1 then it will have an effect on our revenue yields,” Russell Taylor, ITE chief executive, told the Financial Times. “But we have a mitigation plan ready if needed.”

Mr Taylor said ITE was more sensitive to the price of crude than to euro weakness, and the group earns almost two-thirds of its revenues from oil-rich Russia. The high price of oil was the driving force behind ITE’s first half turnover rising from £53m to £68.6m year on year, Mr Taylor said.

“In Russia the oil price is all-important. If it stays north of $100 a barrel then we are in good shape,” he said.

ITE ran 125 events in the construction, oil and gas, travel and food sectors during the six months – up from 104 a year ago.

London-based ITE has been on the acquisition trail over the past few years and recently snapped up Beautex, the operator of beauty industry events in Ukraine, for an undisclosed sum.

The move followed last year’s acquisition of two other events groups in the country, including Autoexpo. Earlier this month, ITE expanded its small foothold in India with the acquisition of two construction events run from Chennai, providing the group with a base in the rapidly growing country.

“The name of the game in India is to get a regional base – to get solid operations in Chennai and Mumbai,” said Mr Taylor, adding that ITE was considering a base in China.

“I would love to have a business to launch shows to participate in the growth in Asia,” he said.

Diluted earnings per share rose from 1.1p to 2.1p and the interim dividend edged up from 1.9p per share to 2.1p.

“ITE’s figures were a touch above our forecasts, driven by a combination of high single-digit organic revenue growth and maiden contributions from a flurry of bolt-on acquisitions,” said Simon Davies, analyst at Canaccord Genuity. “However, recent weakness in the euro will provide a more significant headwind in 2013.”

ITE shares fell 2 per cent to 201.1p.

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