Advertising market ‘volatile’, says DMGT

Daily Mail and General Trust on Thursday said first-half profit before tax rose 24 per cent to £135m, but warned that heavy investment in the business information and online activities would slow the pace of profit growth in the second half.

The share price, up around 300p since last summer, slipped 8p to 847p in morning trading.

DMGT said its newspaper business had contributed less than half the group’s operating profit for the first time, as its business-to-business activities expanded. This was despite the newspapers outperforming their markets, DMGT said.

However, the acrimonious war between London’s evening newspapers took its toll on the figures. The circulation of the Evening Standard, DMGT’s paid-for London paper, fell 18 per cent although its free paper London Lite – up against rival News International’s thelondonpaper – had an average distribution of 395,000.

Peter Williams, finance director, said any new newspaper could be expected to make a loss in its first year but DMGT was happy with the performance of London Lite. Meanwhile, the Evening Standard’s circulation had now stabilised.

The group’s national papers, including the Daily Mail as well as the London papers, increased operating profits by 2.9 per cent to £45.8m, aided by a cover price rise at the Mail.

Advertising revenues rose 2 per cent to £231m, but excluding the London market the rise was nearly 5 per cent, DMGT said. “The advertising market remains volatile and short term,” the company said. It was also cautious about the effect interest rate increases would have on revenues.

The expansion of digital business, such as job and property advertising websites, pushed up operating profits 29 per cent to £5.8m. However, Teletext, the TV information business, made a £3m operating loss, although DMGT said it expected to break even for the full year.

Profits from local newspapers rose 15 per cent to £42.5m, adjusting for the sale of the Aberdeen Journals. Advertising revenues fell 2.6 per cent on a like-for-like basis, with ads for jobs and cars both weak.

The business information division increased operating profits by 27 per cent to £30.5m, while the financial information division – DMGT’s 61 per cent investment in Euromoney Institutional Investor – increased profits from £15m to £31.6m, aided by the acquisition of Metal Bulletin.

Profits from exhibitions rose £3.6m to £20.6m, but the Australian radio businesses increased losses from £1.9m to £2.3m.

Higher finance costs, up from £17.3m to £25.0m, and a sharp fall in exceptional gains from £122m to £45.6m, left reported pre-tax profits at £133m, down 31 per cent. Earnings per share were down from 38.2p to 22.3p, and the interim dividend is up 10 per cent to 4.45p.

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