Euromoney third quarter underlying sales growth as expected

Euromoney posted largely as expected revenue growth in the third quarter of its fiscal year helped by a favourable tailwind from currency movements and the acquisition of rival RISI.

On a reported basis, and for the period starting 1 April and ending on 20 July, total sales were ahead by 13% to £118.4m.

In underlying terms on the other hand, total sales were ahead by 2%, although that was roughly as some analysts had anticipated.

During the period, the pound-US dollar exchange rate was at $1.27, well below the $1.44 seen one year ago.

That provided a significant boost to both revenues and profits before tax, roughly two-thirds of which are denominated in US dollars.

But that boost from FX was expected to largely disappear in the firm's final quarter, management said in its trading update.

The publisher and events organiser saw subscriber and content revenues (on a reported basis) jump 23% to £67.7m, from the year-ago period, buoyed by the purchase of RISI - which contributed £5.4m to top-line growth - and "good growth" from Metal Bulletin.

However, on an underlying basis subscriber and content revenues only grew by 1%.

Furthermore, "challenging conditions" in the asset management sector - which the company had already flagged at the half-year stage - were continuing to act as an offset.

Driving that was the uncertainty regarding the upcoming implementation of the new MiFID II regulations.

In an update on the process of integrating RISI, the reporting agency for the global forst products industry which Euromoney acquired in April, the company said it had been successful and that it was "growing well".

All of the company's other main revenue streams also saw growth on an underlying basis in the third quarter, save for its advertising revenues, which were down 5% to £10.0m -a reflection of the long-term pivot away from print advertising.

Nevertheless, the rate of decline did slow in comparison to the first half, Euromoney pointed out.

Sales income at its events businesses, for which the third quarter of the year is seasonally the strongest of the year, increased by 4% thanks to continued improved sentiment in the banking and finance as well as the commodities sector.

Euromoney also said it was focusing more on large high-margin events.

Net debt rose sharply at period-end, from £83.6m to £173.1m as a result of its acquisitions of RISI and Layer 123.

In a parting shot, management added that operating cash flows continued to be strong.