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(Reuters) - UBM Plc (L:UBM), a British communications and events company, said it would focus on spending resources on its largest and most profitable shows for the next three to five years.
UBM will invest 25 million to 50 million pounds ($40 million-$80 million) annually to acquire events businesses, the company said while unveiling its "Events First" strategy on Monday.
"The strategy ... will enable us to grow revenues ahead of global GDP in our events business and provide a basis for margin expansion over the medium term," Chief Executive Tim Cobbold said in a statement.
UBM said in October that it would buy trade show organiser Advanstar Communications Inc [DLJMDC.UL], becoming the top events organiser by revenue in the United States.
The company's top 100 shows by revenue generated more than 96 percent of earnings before interest, taxes and amortisation (EBITA) for the events business in 2013.
"UBM's events portfolio is best in class, and we expect growth to remain above peers in 2014. Earnings momentum is set to resume in 2015, while geo-adaptation opportunities could multiply with the opening of new exhibition venues in BRICS," Kepler Cheuvreux analyst Andrea Beneventi wrote in a note.
Shanghai, Astana in Kazakhstan, Dubai and Las Vegas are the most ambitious expansion projects, the analyst said, adding that gradual easing of capacity constraints in the coming years could lead to above-GDP growth in trade driven economies.
The company said in August that it expected underlying events revenue growth in 2014 to be broadly in line with last year.
Analyst Beneventi said UBM shares had suffered from two years of "overpromising and underdelivering" by the management.
Overall revenue at PR Newswire, a service used by companies to publish announcements for clients, is expected to grow in line with GDP and margins to be stable with modest upside potential, UBM said.
"This may disappoint given hopes for a disposal (of PR Newswire)...," UBS analyst Alastair Reid wrote in a note.
Revenue at PR Newswire fell 6.4 percent in the six months ended June 30.
UBM also expects to invest about 15 million pounds between 2015 and 2017, and sees costs of 15 million to 20 million pounds over the period.
UBM, which organises shows in the UK, the United States, China and Turkey among others, said the investments are expected to save 10 million pounds in costs from 2016.
Revenue growth in 2015 is expected to reflect the decision to rationalise UBM's smaller events and to exit over time from certain activities in the other marketing services segment.
Shares in the FTSE-250 company were down 1.8 percent at 559 pence at 0946 GMT on the London Stock Exchange.
(Reporting by Noor Zainab Hussain in Bangalore; Editing by Gopakumar Warrier)