Mirror and Express publisher Reach has seen a multi-million pound drop in profits for the first half of 2022 in the face of a UK consumer downturn.
The publication of Reach’s interim results saw its share price fall by 28% as of 10am on Tuesday from 103.7p a share to 83.5p – giving the company a market capitalisation of £270m (a fifth of what it was a year ago).
In the first quarter of 2022 Reach digital revenue grew by 10.4% year on year, but growth fell to 0.3% in Q2.
A 3.9% decline in print revenue to £223.4m meant that overall first half revenue fell 1.6% year on year to £297.4m
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Reach, which publishes more than 100 local titles alongside national news brands The Mirror, Express and Star, saw its operating profit drop by 31.5% from £68.9m to £47.2m. It has paid out £14m in its half-year dividend to shareholders.
The company said falling revenue, which it attributed to record energy prices upping the cost of print and other abnormal market conditions, would be mitigated by an increase in print newspaper cover prices and “further cost efficiencies”.
Reach opened up a group-wide voluntary redundancies scheme last week. Press Gazette understands that in a call with stakeholders after the announcement on Tuesday, Reach executives said there were no set targets for the voluntary redundancy round and it was not part of a wider restructuring of the business.
Reach chief executive Jim Mullen said: “Our ongoing strategic transformation strengthens us financially and operationally while we continue to deliver positive change through our editorial impact.
“We have acted swiftly to address the headwinds facing the business and expect further cost efficiencies and cover price increases to mitigate the impact of newsprint inflation and reduced advertiser demand which are affecting the whole sector.
He added: “We are a stronger, more streamlined, and more efficient organisation, with the group well placed to benefit once industry trends return to more normalised levels of activity.
“In addition, the strength of our balance sheet and cash generation underpins both a growing dividend and continued investment as we transition to an increasing mix of higher quality digital earnings.”
The company reported page view growth of 8%, which it said outperformed the wider publishing sector, as well as managing to register the details of 25% of its UK audience, or around 11 million people.
Reach interim results for H1 2022
| 26 weeks to 26 Jun 2022 | Adjusted results(3) | Statutory results | |||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||
| Revenue | £m | 297.4 | 302.3 | -1.60% | 297.4 | 302.3 | -1.60% |
| Op profit | £m | 47.2 | 68.9 | -31.50% | 34.5 | 28.6 | 20.60% |
| Op profit margin | % | 15.90% | 22.80% | (690bps) | 11.60% | 9.50% | 210bps |
| Earnings per share | Pence | 12 | 17.8 | -32.60% | 8.1 | -11.2 | N/A |
| Net cash | £m | 43.8 | 54.7 | -19.90% | 43.8 | 54.7 | -19.90% |
| Dividend per share | Pence | 2.88 | 2.75 | 4.70% | 2.88 | 2.75 | 4.70% |
NUJ reaction to Reach interim results
Reacting to the half-year results, NUJ Reach national coordinator Chris Morley said: “While there are undoubtedly headwinds that the media industry is facing in relation to advertising and newsprint costs our members will be reassured by Jim Mullen’s assertion that the company has a strong balance sheet and generates significant amounts of cash.
“But they will be disappointed that this cash is being directed solely at the shareholders with £14m being given away as a half-year dividend – 4.7% up.
“There is no mention of the hugely tough environment for employees suffering from the cost of living crisis – except that some titles have appointed specialist reporters to report on it.
“Jim Mullen admits it is ‘challenging’ to recruit talent but fails to recognise that chronic poor pay in Reach is making it uncompetitive for new staff – and keeping existing quality journalists. There is an unshakeable argument that Reach must make a better pay offer if it is to avoid a damaging campaign of industrial action.”
Read the Reach 2022 H1 interim results presentation in full.
Picture: Reuters / Simon Dawson
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