UK news publisher Reach has warned that its full-year operating profit will come in below market expectations after advertising fell in its key end-of-year period, knocking its share price down by nearly a quarter.
The group’s shares fell more than 23 per cent in early London trading on Wednesday.
The publisher of the Daily Mirror and Daily Express said on Wednesday it expected operating profits for the full year to December 25 to be below the market consensus by “mid single-digit” percentage points after a sharp decline in advertising revenue for the fourth quarter.
Chief executive Jim Mullen pledged cost savings of £30mn during 2023 to mitigate the effect of “unavoidable headwinds” from difficult macroeconomic conditions.
“We expect current market headwinds will continue during 2023 and have therefore taken decisive action, putting in place a further cost reduction plan,” Mullen said. “This will ensure we retain our strong foundations and are able to continue investing in our digital growth priorities, which position us to benefit strongly when the economic environment improves.”
Fourth-quarter digital advertising revenue declined 5.9 per cent compared with the previous year, while print advertising revenue declined by 20.2 per cent, the group that publishes a number of UK regional newspapers and websites said.
The drop compared with a 5.9 per cent increase in digital advertising and a 17 per cent decline in print advertising during the July-to-August quarter of 2022.
The advertising revenue declines more than offset growth in circulation revenue for the quarter of 1.8 per cent compared with the previous year.
Reach will generate cost savings “throughout the business” and will include simplifying central support functions, supply chain efficiencies in print and distribution, and “accelerated removal of editorial duplication”.