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Ascential shares tumble as media group swings to a loss

Ascential shares tumble as media group swings to a loss after China’s lockdowns hampered e-commerce arm

  • The London-based information services provider posted a half-year loss of £38.4 million
  • Ascential stocks were the third largest decliner on the mid-cap FTSE 250 Index
  • Double-digit revenue growth was seen across all divisions of the company

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Ascential shares fell Monday after the company suffered losses despite growth in all segments of the company.

After recovering from a profit of £216.8 million in the six months ended June last year, the London-based media company posted a loss of £38.4 million this time around.

Ascential Stocks fell 15.6 percent on Monday to 246.4 pence, making it the second largest decliner on the FTSE 250 Index.

Resurgence: People's return to Cannes Lions creative arts festival boosted revenues in Ascential's marketing department by 88 per cent to £80.8m

Resurgence: People’s return to Cannes Lions creative arts festival boosted revenues in Ascential’s marketing department by 88 per cent to £80.8m

It blamed economic uncertainty, Amazon’s decision to move Prime Day to July and supply chain pressure exacerbated by strict lockdown restrictions in Shanghai for hitting trade in its digital commerce division.

Total intra-segment sales were still up 59 percent to £95.1 million, but margins were constrained by a one-time impairment charge of £31.4 million related to the Edge Digital Shelf analytics platform.

Margins were also stretched by investments that surpassed revenue growth after the group acquired software developer Sellics and e-commerce service provider Intrepid as part of plans to expand its reach in Europe, the US and Southeast Asia.

Nevertheless, CEO Duncan Painter praised the company’s results, with double-digit sales increases in all divisions and profits in line with forecasts, which he said were “all the more pleasing given the challenging macro backdrop.”

Ascential was given a major boost with the physical return of two major events; the creative arts festival Cannes Lions and the European edition of the fintech exhibition Money20/20.

Both events were canceled in 2020 following the rise of the Covid-19 pandemic and subsequent regulations on cross-border travel and personal events introduced by governments.

Their respective stagings this year have been extremely popular, with both their sales and profits surpassing pre-pandemic levels.

Cannes Lions helped boost sales in Ascential’s marketing arm by 88 per cent to £80.8 million, as well as a healthy jump in digital subscriptions in the ad services business WARC.

Further growth was seen in the company’s product design division, where demand for non-fashion goods from sectors such as beauty and consumer technology drove record growth in sales and customer retention volumes.

Berenberg analysts said the company’s trading update “must be taken positively, given the weakness seen on many e-commerce platforms and has raised belated concerns about the outlook.”

They added: “All divisions performed well in sales with digital commerce clearly gaining market share and the event revenue recovery also very strong.”

Bosses at Ascential expect digital commerce sales and margins to improve in the second half, supported by Amazon Prime Day and the easing of lockdown rules in Shanghai.

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