Newspaper sales suffer
Record group Reach sees upturn after Covid hits sales
Reach: advertising suffered in the lockdown (pic: Terry Murden)
Daily Record and Express newspapers group Reach said profits fell in the first half but the company is currently performing “materially ahead of market expectations”.
Adjusted profit before tax came at £53.5 million for the six months to 28 June against £69.9m last time. Statutory profits more than halved from £58.2m to £25.2m.
It said the first half of the year had seen significant year on year declines in print sales of its national and regional print titles.
“When COVID-19 was at its worst we saw around 80% of our regional advertisers withdraw from the market,” it said in an interim statement.
Total revenue for the first half was down by 17.5% to £290.8m with the positive start to the year offset by the COVID-19 impact from mid-March to the end of the first half.
Print revenue fell by 20.1% to £241m with the more resilient circulation revenue declining by 11.5% and the harder hit print advertising declining by 31.9%.
Digital was much more resilient and only saw a decline of 1% over the first half, benefiting from strong growth in the first quarter, followed by declines in Q2 as advertisers withdrew from the market and digital yields fell as a result of less competitive tension in the marketplace.
“This meant that despite our impressive audience numbers we still saw revenue declines in digital from mid- March for the rest of the first half. Strong digital revenue momentum returned in Q3 with 12.9% year on year growth.” said the company, whose titles also include big regional papers such as the Liverpool Echo and Newcastle Chronicle.
“The group is currently performing materially ahead of market expectations for the full year though management remain fully aware that COVID-19 still represents a significant macro-economic challenge to the UK economy, with the potential for subsequent negative impacts on the business,” it said.
The company is on course for £35m in savings which included a 10% pay reduction for most staff, while the board and some members of the senior editorial and management team, took a 20% cut.
Jim Mullen, chief executive, said: “We have seen a strong recovery in the digital advertising market since the worst impacts of COVID-19 in April which has driven a return to healthy digital revenue growth since July, assisted by increased customer engagement and loyalty.
“Following the implementation of the major parts of the transformation programme, Reach now has a strong foundation to drive the next phase of the customer value strategy with increased efficiency and agility in our advertising and editorial operations.”
Cash dividends remain suspended due to COVID-19 uncertainty. However, with the Group currently performing materially ahead of market expectations for 2020, the board is recommending a proposed bonus issue to shareholders, in lieu of and with a value equivalent to, an interim dividend of 2.63p, subject to shareholder approval.
The board intends to resume cash dividends at an appropriate time, subject to market conditions.