Out-of-favour Delling delivered disappointing results for calendar 2007, reflecting a poor third quarter and problems with a loss-making subsidiary.

The only quoted marketing support services company whose assets are in Scandinavia reported pre-tax losses of £3.4m (2006: £5.2m), despite 67% sales growth to £17.5m, which reflected organic as well as acquisitive development.

Considerable crumbs of comfort for Delling, a leading player in the Scandinavian design and exhibitions sector, included a reduction in EBITDA losses to £1.96m (2006: £4.4m), ongoing progress in turning around its troublesome subsidiary and a return to form in the fourth quarter. Having taken considerable cost out of the business and restructured operations in Sweden and Norway, a profit at EBITDA level was delivered for the first quarter of 2008.

For now, executive chairman Aksel Bratvedt says acquisitions are on the back burner, with organic growth the focus until sustainable profitability is reached. Moreover, despite global economic concerns, he is ‘reasonably optimistic about the Scandinavian markets’, since these economies are ‘robust’ and at a different stage in the business cycle to the Anglo-Saxon economies. And while Delling is dependent on marketing budgets, he believes the downturn could play into the hands of its outsourcing operations, where the company is now able to handle increasingly large contracts.

A disappointing investment to date, there is every indication that a decent turnaround is in progress at Delling. However, given investor sentiment towards marketing services ventures in current economic climes, the shares are probably best avoided for the time being.

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