Reach gains plummet as publishing costs rise at Mirror and Daily Express and ad revenues come under pressure
- Reach struggles with rising costs and weak ad revenue
- It told investors it had to pay a further £40 million in operating costs in 2022
- The group expects similar trading conditions this year, but has committed investments
British publisher Reach has reported an annual profit decline of more than 10 percent due to rising costs and a weaker advertising market.
Reach, which publishes both the Mirror and a range of regional titles, saw its statutory profit 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 percent to £106.1 million.
Revenues fell 2.3 per cent to £601.4 million over the period, which Reach determined to be an “industry-wide decline in open market advertising revenue.”
Reach stocks fell 7.3 percent to 84 pence, bringing one-year losses to 44.7 percent.
Mirror publisher Reach said price increases had helped protect revenue in 2022
Like many publishers, Reach struggles with rising costs and weak ad revenue.
Reach told investors on Tuesday it had an additional £40 million in operating costs due to inflation.
Advertising revenue fell 15.9 percent over the year, while circulation fell 1.7 percent.
However, it said price increases and “resilient volume performance” helped limit a decline in circulation revenue to 1.7 percent for the year.
It said: ‘Circulation revenues continue to benefit from increased cover price activity during the second half of FY22, with print trends broadly similar to Q4 ’22 and in line with expectations.’
So far in 2023, total revenues are down 5.8 percent, reflecting a 1.8 percent increase in circulation, and print and digital revenues are down 3.6 and 11.9 percent, respectively.
But the group highlighted a 56 percent growth in data-driven revenue, which now accounts for 32 percent of total digital sales.
It also saw progress in engagement, with a 30 percent increase in active registrations, 4 percent more pageviews, and 7 percent more pageviews per user.
Reach CEO Jim Mullen said, “Reach continues to deliver on our customer value strategy and is becoming a fundamentally different business; more efficient, more digitally skilled and more focused on building the foundation for growing sustainable and data-driven digital revenues.
“Our award-winning journalism and continued strategic investments support a growing number of engaged and active clients.
“The enhanced depth and breadth of our content and company-wide focus on data are driving an increasing share of higher-yielding digital revenues and decreasing reliance on program-driven advertising in the open market.”
But looking ahead, Reach said the challenging trading environment it currently faces will continue this year, “with continued inflation and suppressed market demand for digital advertising.”
But while input costs remain high, Reach said its cost action plan will enable it to reduce its 2023 operating cost base by 5 to 6 percent on a like-for-like basis.
It added: ‘While external factors impact near-term performance, consistent strategic execution will support higher quality digital revenue growth, which with our US expansion puts us in a strong position to grow when macro headwinds ease . Earnings expectations for the full year are in line with current market consensus.”
Mullen said: “We expect uncertain macroeconomic conditions to continue into 2023, but as demonstrated during the pandemic, we are effective in managing them, with an action plan in place to help mitigate the current headwinds.”