Trinity Mirror is due to release its full-year financial results on 27 February and analysts at ABN AMRO are forecasting that pre-tax profits (before exceptionals) will be down by 3.0% at £148.1 million, whilst total sales will fall by 3.7% to £1.1 billion.
New chief executive, Sly Bailey, will give her first presentation for the company to investors when the results are released on Thursday. There is already much speculation that she will unveil a few details about a profit-boosting review of the way the business is structured and operates.
According to the Financial Times disposals of weaker titles have not been ruled out and price cuts at the Daily Mirror may be phased out. It is understood that “all options to increase profits” are being considered.
ABN’s predictions put national newspaper advertising revenues down by just under 5% for the full year, hurt by cover price wars with the Sun, as well as falling sales.
The broker expects Bailey to take her time in deciding on group strategy and structure policies, indicating that there may not be any dramatic new plan presented to investors on Thursday.
Nevertheless, there should be some commentary on the current strategy for the Daily Mirror, which was ‘re-vamped’ and ‘re-marketed’ this time last year. Management has indicated that the benefits of this strategy will become clear in 2003, although ABN analysts claim that the underlying impact of the paper’s repositioning will only become visible when the current price discounting of both the Sun and the Mirror comes to an end.
“We expect this to happen soon – at that point it will be telling to observe whether the Sun (which has discounted more widely and by a greater margin) can hold on to its circulation gains and how price sensitive Mirror readers remain. Around 60% of Mirror readers (and 99% of Daily Record readers) buy their paper at the full cover price, compared with fewer than 40% of Sun readers,” said analysts in flashnote on Trinity Mirror.
Over the last year shares in Trinity have fallen from a high of 492p to 374p last Friday. Stock was boosted at the time of the announcement of a repositioning of the Daily Mirror, but investor sentiment subsequently soured as price cuts failed to translate into meaningful circulation boosts.
In the six months to January 2003, the paper’s circulation declined by 3.5% year on year, whilst the Sun’s rose by 4.1% on the same basis, according to figures from ABC.
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