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Creston's growth slows but long-term strategy on track, says Liberum

Slower growth in the first quarter means the firm expects its full-year performance to fall “slightly behind expectations”.

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The company was hit by a weak euro

Marketing and advertising specialist Creston (LON:CRE) blamed currency woe and customer budget issues for a slower first half, hitting its shares.

A £400,000 hit from a weakening euro, impacted revenue growth, which was just 1% higher to £37.7mln in the first half of the year compared to the same period in 2014.

Budget cuts at a small number of its retail and tech clients due to weaker market conditions also affected the firm, meaning growth was not at the level Creston had previously expected.

Similarly, changes in the way its healthcare clients are using advertising campaigns, including more client-focused projects, also weighed.

While its slower growth in the first quarter was followed by a slightly stronger performance in the second, the company said it expects its full-year performance to fall “slightly behind expectations”.

Shares in Creston, which owns web designer How Splendid and the Unlimited brand, were down more than 15%, or 21.5p, to 117.5p.

But Liberum Capital remains upbeat on the stock despite the slowdown in the first half.

“Fundamentally, Creston is operationally on track with its five year strategy and new business wins are driving improved performance, and How Splendid is growing well with the Unlimited brand being on track,” the broker said.

It points to a number of new contract wins, including becoming the advisor for British Airways's data strategy as well as other contracts with Vodafone, Sony Mobile and McLaren.

“These account wins suggest Creston is building momentum in the agency space. Again the key here is that Creston strategy is very much on track,” the broker added.

The broker reiterated its ‘buy’ recommendation on the stock and has placed a 190p price target on Creston’s shares.

Quick facts: Creston

Price: - -

LSE:CRE
Market: LSE
Market Cap: -
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