Macquarie says STW will not launch capital raising

Macquarie analysts are confident that struggling marketing and communications company STW Group will not launch a capital raising.

The STW board believes it can get its debt under control by boosting earnings, enhancing cash flow conversion, putting acquisitions on hold and undertaking a prudent dividend policy.

STW owns stakes in more than 75 businesses, including Ogilvy Australia, Ikon and Cannings Corporate Communications.

The company said at its annual general meeting it expects 2015 underlying net profit to be in line with 2014's result before restructuring costs, which would imply a figure of $45.6 million.

Macquarie had previously forecast underlying net profit of $50.2 million in 2015.

A research report to clients said STW had been hurt by poor results from a small number of its businesses, which was hitting the group's performance. The company has also lost some key clients.

Street Talk revealed STW had weighed a proposal in recent weeks from a top-tier investment bank, which involved asset sales and simplification of the business structure. The company is not believed to have moved forward with the proposal or mandated any advisers at this stage.

STW is undertaking a strategic review with an update expected in June.