Profits plummet as publisher Mirror and Daily Express costs soar and its advertising revenue is squeezed
- Reach battles rising costs and weak ad revenue
- He has told investors he faces an additional £40million in operating costs in 2022
- The group expects similar trading terms this year but has promised investment
UK publisher Reach saw a more than 10% drop in annual profits due to soaring costs and a weaker advertising market.
Reach, which publishes the Mirror as well as a stable of regional titles, saw its statutory profits fall to £71.3m in the 12 months to December 25, from £79.3m a year earlier . On an adjusted basis, operating profit fell 27.4% to £106.1m.
Revenue fell 2.3% to £601.4 million in the period, which Reach attributed to an “industry-wide decline in open market advertising returns”.
Reach shares fell 7.3% to 84p, taking year-on-year losses to 44.7%.
Mirror Reach publisher says price hikes helped protect revenue in 2022
Like many publishers, Reach struggles with rising costs and weak ad revenue.
Reach told investors on Tuesday it had faced an additional £40 million in operating costs due to inflation.
Its ad revenue fell 15.9% on the year, while circulation fell 1.7%.
However, he said price increases and “resilient volume performance” helped limit the drop in broadcast revenue to 1.7% for the year.
He said: “Circulation revenue continues to benefit from increased hedging pricing activity in the second half of FY22, with overall impression trends similar to Q4 ’22 and in line with expectations.”
So far in 2023, total revenue is down 5.8%, reflecting a 1.8% increase in circulation, and declines in print and digital revenue of 3.6 and 11.9%, respectively.
But the group pointed to a 56% growth in data revenue, which now accounts for 32% of total digital revenue.
It also saw progress in engagement, with active signups up 30%, pageviews up 4%, and pageviews per user up 7%.
Jim Mullen, Managing Director of Reach, said, “Reach continues to execute on our customer value strategy and is becoming a fundamentally different company; more efficient, more digitally capable, and more focused on building the foundation for sustainable, data-driven digital revenue growth.
“Our award-winning journalism and ongoing strategic investments support a growing base of engaged and active clients.
“The enhanced depth and breadth of our content and focus on enterprise-wide data is driving a growing proportion of higher-yielding digital revenue and a decreasing reliance on program-driven advertising from the Free market.”
But looking ahead, Reach said the difficult business environment it currently faces will continue this year, “with sustained inflation and reduced market demand for digital advertising.”
But, as input costs remain high, Reach said its cost action plan would see it cut 5-6% on a like-for-like basis from its operating cost base for 2023.
He added: “While external factors affect near-term performance, consistent strategic delivery supports the growth of higher-quality digital revenues, which, together with our expansion into the United States, puts us in a strong position to grow when the macro headwinds subside.” Earnings forecasts for the full year are in line with the current market consensus.
Mullen said: “We expect uncertain macroeconomic conditions to persist in 2023 but, as the pandemic has shown, we are effective in managing them, with an action plan in place to help mitigate headwinds. current.”
