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STV issues profit warning as macro weakness dents business confidence

ALN

Shares in STV Group PLC plummeted on Monday after it warned full-year revenue and adjusted operating profit are expected to be materially below consensus.

Chief Executive Rufus Radcliffe said: ‘The deteriorating macroeconomic backdrop continues to lower business confidence impacting both markets in which we operate.’

In response, shares in the Glasgow-based media company slumped 24% to 144.90 pence each in London on Monday morning.

STV said that as a result of a further deterioration in the commissioning and advertising markets towards the end of the first half of the financial year to June 30 and into the second half, full year revenue and adjusted operating profit are expected to be materially below consensus.

Group revenue for the full year is expected between £165 million to £180 million at an adjusted operating margin of 7%, with £10 million of the group revenue range driven by updated Studios guidance.

In 2024, STV reported revenue of £188.0 million, adjusted operating profit of £20.6 million and an adjusted operating margin of 11.0%.

STV said it has identified further cost savings of £750,000 for the full year bringing the 2025 target to £2.5 million. Further cost savings are expected to be realised in 2026.

Total advertising revenue for the half-year was in line with guidance but expectations for the third quarter are lower than anticipated due to the recent further deterioration in the advertising market, STV said.

Third quarter total advertising revenue is now expected to be down 8% with July down 20%, and August and September, taken together, expected to be broadly flat.

Reflecting this outlook, STV now expects the revenue and adjusted operating margin for the new Audience division for 2025 to be £90 million to £95 million and from 13% to 15% respectively.

STV said there has been significant commissioning market deterioration in late first half and early second half as the UK macroeconomic backdrop has worsened.

The revised full year outlook for STV Studios is for revenue of £75 million to £85 million at an adjusted operating margin of around 4% as lower activity volumes impact fixed overhead recovery.

The forward order book is now £54 million, compared to £66 million at the end of April.

CEO Radcliffe said STV is ‘proactively responding’ to market conditions and there continues to be ‘strong long-term growth potential’ despite the ‘short-term challenges.’

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