Fragile consumer confidence and a lull in the exhibition cycle are set to hit sales at the NEC – despite operating profits increasing by almost a quarter in the past 12 months.

Rising sales and profits from its subsidiaries helped NEC Group increase revenue by 12.8 per cent to £123.9 million last year, while operating profit was up by 22 per cent to £29.4 million.

However, with high inflation and unemployment causing consumer confidence to fall and a traditional lull in conference business next year, chief operating officer John Hornby said he was cautious about 2012.

In spite of the improved performance last year the company posted a deficit of £7.7 million as it continues to pay back a long-term loan to owner Birmingham City Council.

Mr Hornby said: “We see from the results of the exhibition and conference business it is a slow but steady recovery, a gradual increase in confidence – particularly with corporate spending on exhibitions and conferences.

“But it is less on the up with consumer buying so there is fragility with customer confidence, which means we are already cautious in terms of the next financial year.

“In relative terms it’s a downturn in the exhibition cycle and we won’t see growth in the exhibition business but we are looking at growing the other businesses and looking to continue the steady recovery we have seen.”

Mr Hornby said the group benefited from rising sales at ticketing agency The Ticket Factory and its catering arm Amadeus. Ticket Factory reported an operating profit of £29.4 million, which represents a 22 per cent rise, while Amadeus, the NEC Group’s catering arm, delivered a profit of £37.6 million – up 27 per cent on the previous year.

However, the firm remains mired in deficit with long-term loan repayments on the costs of building the ICC, NIA and additional halls. But Mr Hornby revealed there is light at the end of the tunnel over the debt repayments, which arguably have proved something of an albatross around the group’s neck.

Hefty interest rates only continue until 2016 on loans of £200 million, with the prospect of lower repayments to look forward to beyond that until 2027.