Profit Rises for STW due to Cost Cuts

Submitted by Jim Thesiger on 19 August, 2009 - 04:22

STW Communications Group (SGN), a company that focuses on advertisement and communications has boosted its first half profit as much as 8 percent by reducing its costs to deal with the reduced client spending. STW authority has stated that the first half profit was about $12.8 million up from $11.9 million of the corresponding period of the previous year. The company has estimated an underlying net profit of $33 million for the current year where for the previous year it remained at $39.1 million. It is to be mentioned that STW is a group which is formed by more than 70 communication and advertising entities.

According to the STW authority, the company faced difficult times with first half revenue dropping 6 percent to $138.2 million as consumers reduced their expenditure due to the financial crisis. The company’s globally aligned revenue dropped 15 percent in the period while there was a 5 percent increase in local revenue which was generated from local bluechip clients.

Michael Connaghan, the chief executive of the group claimed that, although the economic condition was not in favour of the company, the financial performance of the vast portion of the entities within STW portfolio was quite satisfactory. However, STW result was negatively affected by the disappointing performance of a small number of entities, he added. Mr. Connaghan also stated that the group went for cost control measures in order to deal with the economic downturn.

The company is determined to seek for possibilities to merge current businesses in order to develop scale and will consider disposing of those which failed to meet the goals of the group. The company is fully focused on all aspects of its business where variable cost base can be controlled. STW Communications have announced a dividend of $1.5c per share which is lower than what was set for the previous corresponding half (4.8c per share). STW shares were closed at 72c.