Like for like revenues at GWR Group dropped by 11% in the first quarter, chairman Henry Meakin told the company’s AGM this afternoon. He added that the difficult advertising market conditions referred to in the company’s year-end financial results in May (see GWR Announces Board Changes As Results Come In Line With Expectations) remain throughout most advertising-related industries.
GWR’s total revenues rose by 8% across the first half, but only after the acquisitions of DMG Radio and Marcher Group are factored in to the figures. Local advertising, which accounts for around 40% of GWR’s total UK revenue, was, as expected, slightly more resilient and dropped by just 4%. National revenue, on the other hand, fell by 15%.
Meakin said that action is being taken to reduce the company’s costs and to underpin its future profitability. “A pattern for the second quarter of our financial year is now beginning to emerge and I am encouraged that our revenues show a better performance when compared with the first quarter. In particular, our local stations are expecting a modest year on year growth in total revenues in this quarter,” he added.
Nevertheless, there still remains to be ‘consistent’ evidence of when the current market conditions will improve. GWR says that for the purposes of its forecasts, it is not assuming any significant recovery in the advertising market until Q1 2002.
“We are encouraged by evidence which suggests that radio in the UK is performing better than most other media, in particular television, and continues to grow its share of total display advertising revenues,” said Meakin.
Analysts at ABN Amro say that GWR has outperformed the UK radio market in the second quarter due to its high exposure to local radio advertising revenues (40% versus 27% average). The broker says that GWR’s outlook is more pessimistic than its own, which is already below the consensus. ABN expects a 0.4% growth for 2001 – Zenith Media reckons 5% and the Advertising Association 2.1%.
ABN is predicting the following quarterly growth rates:
| Advertising growth rates 2001 |
| |
|
| Q1 |
1.5 |
| Q2 |
-17.5 |
| Q3 |
7.0 |
| Q4 |
11.0 |
| |
|
| Source: ABN Amro estimates |
|
Shares in GWR were down 7½p at 227½ by 2:30pm today.
