Future Network Issues Second Profits Warning

Magazine group Future Network has issued a new profits warning, just two months after it revised its previous estimates. In a trading update released this morning the group said it will not achieve the profits, revenues and EBITA estimates laid out in November (see Future Shares In Freefall As True Cost Of Accounting Errors Is Revealed).

Underlying profits for the year to December 2000 have now been reduced to £34m, compared to the £40m estimate in November. Sales for the year are expected to be 3% lower at £253m and EBITA has been revised to a loss of 1m.

Future relies heavily on fourth quarter sales of magazines but its latest figures for November indicate that seasonal uplift has not occurred. As much of the magazine business is operated on a sale or return basis, with production and promotion costs paid out before revenues are known, it is difficult to estimate December’s sales.

Greg Ingham, chief executive of the group, said: “Estimating the expected results for the vital fourth quarter of 2000 is proving to be an extremely difficult task with trading conditions not reflecting their traditional seasonal uplift. As so much of our business is seasonally weighted to the fourth quarter, even relatively minor changes in newsstand sales can have a significant impact on the results of operations.”

The continued softness of the computer games market is also blamed for the downturn, compounded by delays in the launch of Sony Playstation 2. Future holds the contract to publish the official magazine for the new console but its low hardware availability has lead to stunted sales across the group’s games titles.

The company has said it now intends to cut investment levels in 2001 to below £20m, compared to its previous budget of £30m. Ingham said: “We are naturally disappointed at having to make a further cut in expectations for the year.”

Shares in the group fell 47% this morning, down 67˝p to 76˝p.

Future Network: 01225 442 244