FX and Ukraine a concern for EM-focused ITE Group

28th Mar 2014 07:16

- LFL sales up 10 per cent, but down after FX- Profits at record high in H1- Ukraine sales affected by crisisITE Group, the emerging markets-focused trade exhibitions and conferences organiser, said that revenue growth has been held back by adverse currency movements.While the company said it is still set to deliver record profits in the first half, it also warned that sales for its Ukrainian business have been affected by the current crisis. Ukraine contributed 6% to group revenue last financial year.Revenue for the six months ending March 31st is expected to be around £72, up 4% from £69m the year before, reflecting a stronger biennial pattern and good trading. Like-for-like (LFL) sales are up 10% on a constant currency basis. However, after including foreign exchange (FX) movements, LFL revenue was actually down 2%. "These factors together with a first-time profit contribution from the recently acquired Chinacoat event which took place in November last year will help the group produce record profits for the period," ITE said.Given that most of ITE's operations are overseas, the company has to deal with movements in FX rates against the pound. Its larger exposures are to the euro, ruble, Turkish lira and the Kazakh tenge, which excluding the euro have all weakened significantly against the pound during the period.The company estimates that if current FX rates prevail for the rest of the year, it will have a 13% negative impact on LFL revenue, though the effect on profits will not be as severe.ITE said it has been able to run its exhibition calendar in Ukraine as usual despite the ongoing geopolitical climate, but admitted that sales have been hit. The company expects there will be a £2m negative impact on profits from the Ukrainian business for the whole year, the majority of which will be reported in the second half."The group continues to monitor the political uncertainty surrounding Ukraine and Russia, and the potential effect on sales in those countries."BC