DMGT says first quarter trading ahead of expectations despite fall

DMGT, owner of the Daily Mail and Metro newspapers and Teletext, has reported first quarter results that show revenue down 15% year on year to £482m.

However, it says that trading in the first quarter has been ahead of expectations.

Revenue dropped 8% on an underlying basis with a strong performance from non-event B2B businesses operations.

Associated Newspapers, in which the Mail titles sit, saw total revenues for the quarter fall by 12% to £208m, an underlying fall of 6%, after excluding the Evening Standard and London Lite; the latter closed on 13th November last year while a majority stake in the Evening Standard was sold.

Total underlying advertising revenues in the quarter fell by 11%. Within this figure, revenues from Associate’s newspaper operations fell by 8%. Display was down 8%, classified down 10% and digital up 4%.

Retail, the largest display category, grew by 7% in the quarter and motors advertising was flat. All other major categories were down year on year. The revenues of AN Digital from its core operations in jobs, property and motors fell by 13%, due mainly to the depressed recruitment market.

Associated cut costs by 7% in the quarter on a like for like basis, despite significant investment in promotional spend on the national newspapers.

The publisher says that trading in January has shown a marked improvement on last year, with advertising revenue up year on year in the newspapers and their online “companion” sites, although, as usual, visibility on future advertising performance is very limited.

Regional press division Northcliffe Media’s total revenues for the quarter were down by 15% to £73m. Of this, UK revenues were down 14% and International down 23%, down an underlying 27% in local currency.
Northcliffe’s ad revenues for the quarter were 13% lower than the same period last year, compared with a year-on-year decline of 18% in the previous quarter.

The division says that trading conditions were challenging, particularly for recruitment advertising which was down 33%. In addition, retail declined by 7%, Property was down 5% and Motors fell by 8%. January has seen a continuing improvement in advertising trends.

UK digital revenues for the quarter were 11% higher than the same period last year, supported by good performances from Property, Motors and Retail.

Revenues from the Group’s B2B operations in the quarter were £186 million, 20% lower than for the corresponding period last year, but with an underlying fall of only 7%.

Martin Morgan, chief executive, says: “Trading in the first quarter has been ahead of our expectations and the new calendar year has started well, but we remain cautious about the outlook for the rest of the year, particularly in the UK. We continue to manage the business actively to defend profitability with the focus on driving organic growth remaining our priority.”

Commenting on the results, Andy Viner, head of media, at BDO LLP, says: “Today’s trading update from DMGT is a mixed bag. Revenues are down 15% on last year – this was in line with expectations but does not tell the full story.

“The business to business part of the organisation has continued to be resilient, although the business to consumer arm has continued to face challenging market conditions particularly in the areas of display and classified advertising. Hence, DMGT has been fairly cautious in its outlook. Management has continued to show margin improvements, good cost control, sensible gearing and appears to be heading in the right direction.

He adds that DMGT is well-positioned compared to rivals who appear to have less focus on innovation and it does seem to be channelling its resources in the right areas as people consume media in different ways.

“It’s impressive that DMGT has jumped early to target the online property information market. Innovation is key if the company is to combat the challenging market, as advertising revenues and long-term circulation declines continue to pose a problem for all print media.”

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