Reach targets £30m cuts as revenue slumps
Newspaper group Reach is targeting further savings of at least £30m in production as it faces a squeeze on advertising revenue and warned that its profits will be below forecast.
The proposals will mean around 200 employees across the group will be made redundant. Shares plunged 28% to 78.91p in early trading.
The publisher of the Daily Record, Mirror and Express titles, as well as regional papers around the UK, said the cuts will be generated throughout the business and include simplification of central support functions, supply chain efficiencies in print and distribution, and accelerated removal of editorial duplication.
It said circulation revenue grew by 1.8% in the final quarter on the back of cover price increases but is down 1.7% for the year while digital and print advertising were lower than forecast.
This fall was largely due to a significantly lower than anticipated benefit from traditionally stronger programmatic yields and campaign spend around Black Friday and Christmas, which has affected the whole sector.
“More broadly, we have also seen the continued impact of macroeconomic and consumer uncertainty, reflected in slowing market demand for advertising.”
Digital revenue and print advertising for Q4 declined by 5.9% and 20.2% respectively.
Lower than forecast group revenue in Q4 and the less profitable revenue mix of stronger circulation but lower advertising, is expected to impact profit and the board now expects operating profit for FY22 will be below the current market consensus by a mid-single digit percentage.
The business is scheduled to report results for FY22 on 7 March 2023.
A new chief financial officer, Darren Fisher, will join the business on 1 February.
Jim Mullen, chief executive, said: “While the macroeconomic environment remains challenging for the whole sector, we are continuing to deliver on our strategic priorities. Consistent growth in audience engagement, an increasingly active user base and a growing pool of customer data is supporting a higher quality digital mix, with data-led, strategically driven revenue c. 30% of our digital business.
“Page view growth for the year of 4% is outperforming the publishing sector, our registered customer base of 12.5m is now 25% of our UK audience and with the expansion of our footprint in the US, we’re confident that this will drive more sustainable growth for the long term.
“We expect current market headwinds will continue during 2023 and have therefore taken decisive action, putting in place a further cost reduction plan.
“This will ensure we retain our strong foundations and are able to continue investing in our digital growth priorities, which position us to benefit strongly when the economic environment improves.”
|Q4 YOY1||FY 20221|
|– circulation rev||1.8%||(1.7%)|
|– advertising revenue||(20.2%)||(15.9%)|