Record and Express suffer as costs bite
Daily Record and Daily Express owner Reach said revenues had slowed in the second half against strong comparatives last year and a sharp increase in newsprint costs.
Shares closed 26% lower on the announcement of half-year figures to the end of June which showed group revenue fell 1.6%.
Print income came in 3.9% lower at £223.4m, with circulation and advertising down 5.1% and 9.9% respectively.
Digital revenue was £72.5m (2021: £68.8m) up 5.4% for the six months but only by 0.3% for for Q2.
There was an adjusted operating profit of £47.2m, down 31.5% (£21.7m); reflecting “unprecedented increase in newsprint cost” which was up c.65% on a like-for-like volume basis.
Despite the fall in revenue and profit the board has declared a 4.7% rise in the interim dividend to 2.88p.
The group’s titles include the UK-wide Daily Mirror, Daily Star, Sunday People and Sunday Mirror as well as local papers such as the Manchester Evening News and Liverpool Echo and OK! magazine. It recently closed Scottish Business Insider and recently invited editorial staff to apply for redundancy packages.
Jim Mullen, CEO, said: “We’re financially, operationally, and culturally a stronger business than we were when we launched our Customer Value Strategy three years ago.”
While digital traffic growth in 2021 was suppressed against a COVID-inflated comparator in the prior year, he said the company has returned to growth, with page views ahead of the rest of the publishing sector, up by 8% for the period. Page views per user for the period was up by 2%.
However, during Q2 Reach started to see a sector-wide slowdown in advertiser spend, reflected in a 40% lower yield on advertising sold programmatically through the open market.
In response to the significant inflationary pressures currently impacting the business, particularly in newsprint, it has reduced print volumes or supply, without any significant impact on availability and by reducing pagination, both by around 5-6%, it expects to realise significant efficiencies during H2.
Circulation revenue (c.70% of print) improved through the period (Q1: (6.2%), Q2: (4.0%), benefitting from price increases across national and some regional titles, which will continue to strengthen circulation in the second half of the year.