Media group Reach hails digital growth during pandemic
In a trading update ahead of full-year results the group, which is also behind the Mirror and Express titles, highlighted digital revenue growth of 16.2 per cent for the last five months, up from 12.9 per cent in the third quarter of the year.
However, although it said circulation sales have “remained resilient despite the recent lockdowns”, it reported a decline in print sales of 19.6 per cent.
Reach said it expects these trends to continue into December, “while recognising that the current macroeconomic uncertainties make forecasting more challenging”.
Overall, group sales dropped by 13.9 per cent but cost-cutting measures will help operating margins in the second half of the year to be “materially ahead” of the first.
Earlier this month the company announced plans to close two print sites, putting 150 jobs at risk of redundancy following a review of its print capacity. It has started a consultation process over proposals to close the sites in Luton and Birmingham.
In April it cut staff pay by 10 per cent and furloughed 20 per cent of employees as it looked to cut costs amid the Covid-19 crisis.
Chief executive Jim Mullen said although the headwinds from Covid-19 have been “considerable”, the group is approaching the end of the year with “a strong and growing digital business, resilient print circulation sales, and a new, efficient operating model”.
He said the group was seeing an increased focus on business intelligence with the launch of a new tool on track for December “which will provide enhanced data and insight that will support further digital revenue growth”.
He added: “Whilst macroeconomic uncertainty remains, we approach 2021 with confidence in the long-term value of our loyal audience and trusted brands and with strong digital momentum."
Reach said the number of registered customers has now exceeded 4.25 million, and that it is on track to deliver the 10 million registrations it is targeting by the end of 2022.
It said it had continued to generate healthy levels of cash during the period and is forecast to retain a strong positive cash position at year-end despite incurring one-off cash costs associated with the transformation programme and other historical items.
Earlier this week Reach acquired the remaining 50 per cent of Independent Star, which increased its portfolio in Ireland to eight newspapers, one female lifestyle magazine and six online titles.
House broker Numis described it as a strong trading update, reiterated its “buy” recommendation and raised its target price on the shares to 210p from 190p.
The group is due to publish its full-year results to December 27 on March 1. Reach acquired the Express & Star titles in 2018 and also owns OK! Magazine.
Earlier this week the Daily Mail and General Trust reported a halving of annual profits as its newspapers, events and UK property information businesses were hit by the effects of the coronavirus pandemic. Profit before tax fell 50 per cent to £145 million.
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