The Telegraph’s pre-tax profits fell by 88 per cent to £1.6m last year, new financial figures show.
But total subscription revenues at the group were up by ten per cent, driven by a 27 per cent uplift in digital subscription revenue.
The Telegraph said it is now approaching the halfway point of a three-phase strategic plan which will see it “emerge into a growth era in profits”.
Combined accounts for the Telegraph Media Group – publisher of the Daily Telegraph, Sunday Telegraph and telegraph.co.uk – and Telegraph Events, out today, show a 2.6 per cent decline in revenues to £278.1m in 2018.
When the Telegraph Media Group’s figures are taken on their own, they show pre-tax profits down 93 per cent to £900,000 and revenues of £271m.
The company put the decline down to “the structural decline across the industry in print advertising and circulation” and added it is “partially offset by significant growth in subscriber volumes and revenues”.
The Telegraph reached 3.3m registered users in 2018, topping its 3m target for the end of the year.
It is now has 5m registered users, of which 400,000 are paying subscribers across print and digital.
Telegraph chief executive Nick Hugh (pictured) is understood to be confident another 100,000 paying subscribers will be added next year.
In 2018 the company set a target of reaching 10m registered users and 1m paid subscribers by 2023.
In a tweet, Telegraph chief executive Nick Hugh said decline in profits “stems from investment in more journalists”.
The Telegraph created a total of 39 net new journalist roles in 2018, and 37 so far this year, through a £10m investment programme.
These include roles in an expanded Westminster team, its new technology team, and its health and fitness and family sections.
It also created a new “long-form” video team at the end of 2018, although this resulted in a number of job cuts.
Hugh tweeted that the company was “building for the future” and will grow its subscriber base further. He also dismissed claims that Brexit – which the paper continues to support – is bad for business.
Figures released by The Telegraph also show a fall in operating profits from £21m to £8.1m last year, but the group said this was “entirely expected”.
Hugh said the company was “extremely pleased” to have beaten its financial targets in 2018 “despite the structural changes and economic uncertainty”.
“Despite the ongoing structural challenges in the industry, we will continue
our investments in journalism and subscriptions, whilst improving our overall profit margins to continue our path towards a sustainable model, centred around our world-class centre-right journalism,” he said.
“We anticipate that our 2019 financial results will show an improvement as the business continues to deliver its strategic plans.”
Hugh said the company was “tracking ahead of plan” and that the current numbers give “great optimism that the plan is working”.
Despite revenue and profit drops, the Telegraph said there were “encouraging signs of progress”, pointing to growth in reader revenue of two per cent year-on-year.
“Driven by subscribers, both print and digital subscription revenues continue to grow, more than offsetting casual paper sales decline,” the company said in a statement.
The Daily Telegraph now has an average monthly circulation of 315,270, according to ABC figures for August, following an 18 per cent fall from 385,346 since January 2018.
The Sunday Telegraph’s circulation fell 16.5 per cent in the same period to 249,425.
Despite this there was said to be a “turnaround” in print revenue performance, with a four per cent improvement in its contribution to the business year-on-year.
As a result, 54 per cent of Telegraph revenue now comes directly from readers, while advertising revenue was two per cent ahead of budget.
The Telegraph said it is now approaching the halfway point of its three-phase strategic plan.
During the first phase it focused on “investing for the long-term future of the business to create new avenues for growth” and the current, second phase is about stabilising revenues by growing the proportion coming directly from readers.
“Phase three will see the group emerge into a growth era in profits, with a business fit for the future of journalism,” it said.