DMGT Results Flat, But Outlook Is Optimistic
Advertising revenues at Daily Mail & General Trust’s (DMGT) Associated Newspapers division grew by 10.5% across the half year to 1 April 2001. The Daily Mail, Mail On Sunday, Evening Standard and Metro all performed well in terms of ad revenue and the division saw operating profit up 16% and turnover up 6%.
London’s Evening Standard circulation fell by 2.5% to 435,000 copies, although recruitment and property advertising were particularly strong for the paper. Associated’s free weekly morning title, Metro, is performing well, the company said. Losses more than halved from last year’s level and the title is on track to break even during 2002.
Ad revenues have slowed for virtually all media during the course of the year, but DMGT says that good forward bookings at Associated suggest a recovery in the last quarter.
Revenues from the internet division, Associated New Media, have been disappointing, echoing the experiences of many dot-com ventures.
Northcliffe Newspapers, DMGT’s regional business, increased operating profit by 19% to £46.1 million. This includes the first contribution from the Bristol United Press business, acquired by DMGT early last year. Excluding the effect of the Bristol acquisition, operating profit was up 7%.
Advertising revenue growth at Northcliffe continued to be strong for most of the period, although the lead up to Easter did not produce the expected uplift. Recruitment advertising was up 25% across the half year and remained 17% up in March, despite being compared with a buoyant market last year.
DMGT says that the generally downward trend of regionals’ daily circulation is the subject of attention and investment.
DMG Radio Australia’s regional stations suffered from the post-Olympics slump which has afflicted rural Australia and which resulted in advertising revenues 9% lower than last year. The result for the period also includes the pre-launch costs of Nova FM, which went live in Sydney on 1st April. The licence acquired in Melbourne in December 2000 for A$70 million (£26 million) will be launched later this year. Last week, a joint venture between DMG and The Australian Radio Network acquired a licence in Brisbane for A$67 million (£25 million) (see DMG Radio Australia Wins New Licence).
Pre-tax profit across the group as a whole dropped slightly, from £72.4 million to £71.6 million. Operating profit was fairly flat at £103.0 million, an increase of 4.5% on the previous year. The profits are flat largely because of investment in Metro, new media and digital Teletext.
DMGT has increased its interim dividend by 10% to 2.75p per share.
At midday today shares in DMGT were up 14½p at 774½p.
SG Securities: Hold, price target of 794p
