Reach says it has 'strong foundations' after 57% drop in profit
Reach PLC, owner of the Manchester Evening News and Liverpool Echo, has said it is performing “materially ahead of market expectations” after reporting a 57% drop in pre-tax profit to £25.2m for the six months to June 28th.
The publisher put the results down to a “strong recovery” in digital advertising and a major restructure in which 550 roles were made redundant in the wake of the coronavirus pandemic.
Total revenue for the first half of 2020 was down 17.5% to £290.8m (from £352.6m), with operating profit of £28.9m (down from £63.7m).
Print revenue fell 20.1% to £241m. Circulation revenue declined by 11.5% and print advertising was down 31.9%. Digital revenue decreased by 1% for the 26-week period.
Reach revealed plans to shed around 550 jobs, including approximately 300 in editorial and circulation, in July. The company said the move represented a one-off cost saving of £20m and would save £5m annually.
Reach chief executive Jim Mullen, pictured, said: “We have seen a strong recovery in the digital advertising market since the worst impacts of Covid-19 in April which has driven a return to healthy digital revenue growth since July, assisted by increased customer engagement and loyalty.
“This illustrates the significant potential of the customer value strategy as our websites, apps and newsletters attract increased page views from our scale audience, helping to drive forward digital revenues.
“Following the implementation of the major parts of the transformation programme, Reach now has a strong foundation to drive the next phase of the customer value strategy with increased efficiency and agility in our advertising and editorial operations.
“Award-winning journalism and content enable our news brands to shape the daily conversations of millions of people. Moving forward we will see continued momentum from new and improved products.
“Our strengthened customer insight and innovation teams will assist us in driving stronger and deeper customer relationships, increasing our appeal to advertisers and driving revenue growth.
“This will enable Reach to continue to deliver for stakeholders over the long-term. With the business currently performing materially ahead of market expectations, the board is recommending an issue of bonus shares to shareholders.”