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Informa revenue drops but outlook improves
12th Jun 2020 07:01
(Sharecast News) - Informa warned revenue was likely to fall by almost a third in 2020 but indicated prospects were brightening as business starts to revive in China.
The events and information company forecast annual revenue of about £2bn, down from £2.9bn in 2019. More than 160 brands have cancelled events at a cost of about £300m and no physical events were held in April or May, the company said.
Informa said activity for physical events had started to pick up in China and that the outlook for trade shows in the second half of the year was encouraging in that market. In the US, Informa's biggest market, physical events are unlikely to restart until September and with activity varying between states.
Other countries' emergence from Covid-19 restrictions will also be patchy and slow but more than 300 customers have opted to hold digital events instead of physical events in 2020, Informa said.
Events make up about two-thirds of Informa's revenue with information and publishing accounting for the rest. The subscriptions business is mainly trading well and Informa Intelligence's clinical trials and drug development brands are performing strongly. The group revenue guidance for 2020 is broadly in line with analyst forecasts.
Informa shares rose 8.1% to 469.50p at 11:39 BST and were the second-biggest gainers in the FTSE 100 index as investors latched on to the encouraging update. Before Friday the shares had more than halved in 2020 as Covid-19 restrictions threatened its prospects.
Shore Capital analyst Roddy Davidson, who recommends buying Informa shares, said: "Although this morning's update does not contain any significant new information or surprises, it is useful to have confirmation of the status quo and encouraging to note plans for the tentative return of some events."
Informa said it had identified more than £400m of cost savings including recovering expenses from cancelled events, scrapping discretionary spending and freezes on recruitment and pay.
The company scrapped its dividend and raised £1bn from shareholders in April to strengthen its balance sheet. On Friday it said it was in talks with US private placement debt holders and that it would decide whether to seek covenant waivers depending on how the events business fares in the second half.
Stephen Carter, Informa's chief executive, said: "Our subscriptions businesses continue to perform resiliently against a tough market backdrop, whilst our events businesses - in the absence of physical exhibitions, events and conferences - are working closely with customers to provide alternative digital services, with a focus on long-term relationships ahead of short-term revenue.
"Despite continued near-term unpredictability, our strengthened balance sheet, continuing cost controls and strong liquidity is enabling us to focus on the other side of Covid-19."
The events and information company forecast annual revenue of about £2bn, down from £2.9bn in 2019. More than 160 brands have cancelled events at a cost of about £300m and no physical events were held in April or May, the company said.
Informa said activity for physical events had started to pick up in China and that the outlook for trade shows in the second half of the year was encouraging in that market. In the US, Informa's biggest market, physical events are unlikely to restart until September and with activity varying between states.
Other countries' emergence from Covid-19 restrictions will also be patchy and slow but more than 300 customers have opted to hold digital events instead of physical events in 2020, Informa said.
Events make up about two-thirds of Informa's revenue with information and publishing accounting for the rest. The subscriptions business is mainly trading well and Informa Intelligence's clinical trials and drug development brands are performing strongly. The group revenue guidance for 2020 is broadly in line with analyst forecasts.
Informa shares rose 8.1% to 469.50p at 11:39 BST and were the second-biggest gainers in the FTSE 100 index as investors latched on to the encouraging update. Before Friday the shares had more than halved in 2020 as Covid-19 restrictions threatened its prospects.
Shore Capital analyst Roddy Davidson, who recommends buying Informa shares, said: "Although this morning's update does not contain any significant new information or surprises, it is useful to have confirmation of the status quo and encouraging to note plans for the tentative return of some events."
Informa said it had identified more than £400m of cost savings including recovering expenses from cancelled events, scrapping discretionary spending and freezes on recruitment and pay.
The company scrapped its dividend and raised £1bn from shareholders in April to strengthen its balance sheet. On Friday it said it was in talks with US private placement debt holders and that it would decide whether to seek covenant waivers depending on how the events business fares in the second half.
Stephen Carter, Informa's chief executive, said: "Our subscriptions businesses continue to perform resiliently against a tough market backdrop, whilst our events businesses - in the absence of physical exhibitions, events and conferences - are working closely with customers to provide alternative digital services, with a focus on long-term relationships ahead of short-term revenue.
"Despite continued near-term unpredictability, our strengthened balance sheet, continuing cost controls and strong liquidity is enabling us to focus on the other side of Covid-19."