Russia-focused events group ITE (ITE) recovers from earlier lows, up 0.3% to 154p as it confirms results for the year 30 September are ahead of expectations but strikes a cautious tone on the outlook.

Web chart - ITE - Dec 14

The group was already guiding towards a beat in its pre-close update (1 Oct) and posts record headline pre-tax profits of £60.3 million – up 1.5% year-on-year - and hikes its dividend by 6%. However revenues fall 9.1% to £174.8 million and the, at best, lukewarm market response reflects a very uncertain macro backdrop.

Analysts were forced to downgrade numbers today as they factored in the impact of the plunging Russian rouble. Russia's economy is under severe pressure due to sanctions and falling oil prices and this is almost certain to impact ITE's business in the country. Despite expansion in other markets - reflected in today's acquisition of the Eurasia Rail event in Turkey - Russia remains the £386 million cap's main market, accounting for nearly 60% of revenues. In fact the company confirms like-for-like revenues in the early part of the September 2015 financial year are circa 17% behind this time last year, and 9% behind at constant currency.

Numis remains a buyer with a 293p price target and says: 'ITE management have a long track record of effectively managing their cost base very efficiently against macro headwinds, however ITE profits remain exposed to pressures on the broader economy. Past experience suggests that when Russian recovery does come this will signal very strong growth for ITE, as it did post the financial recession of 2008.'

Investec retains its own 'buy' recommendation but puts its price target and forecasts under review, commenting: 'Figures are good, though it is again all about the RUB (rouble) and outlook for Russia, both of which have weakened further in recent days post oil price falls. The shares should represent long term value, though our fear is that things may yet get worse before they get better.'

N+1 Singer stays at 'hold' with a 154p price target and notes: 'The shares have already been battered and EPS drops again but no lower than we would have estimated on back of rouble impact from the last week. We put the shares under review. Until there is a turn in conditions and oil/rouble stabilise the shares will remain volatile.'

Issue Date: 02 Dec 2014