Mail Group Weathers The Storm In Tough Ad Climate
DMGT has announced a rise in profits for the half year to 2 April 2006, despite being hit by the widespread slump in advertising. Pretax profit rose by 7% to £108.7 million, with revenue rising by 2% from to £1,083 million.
Finance director Peter Williams called the company’s performance “a case of two halves, with our consumer businesses around the world under pressure and advertising soft, but the business-facing divisions performing very strongly. That’s how it’s been and that’s how we see it going forward.”
Moves by DMGT to diversify away from its traditional newspaper niche and into the business sector has meant the group has shielded itself from a difficult environment, which would previously have been far more damaging.
Indeed, the business-to-business division grew its revenues by 33% to £104 million and operating profit rose by £10.0 million (52%) to £29.2 million. DMG Information increased its operating profit by £9.9 million to £24.1 million on revenues up 26% to £154 million.
But it was a different story for DMGT’s newspapers. Both Associated Newspapers, which publishes The Daily Mail, Mail on Sunday, Evening Standard and freesheet Metro, and Northcliffe, the regional newspaper division, have had to cut costs in the light of ‘depressed’ advertising revenues.
Northcliffe staff numbers have fallen from around 6,800 in June 2005 to around 5,950 at the end of April this year. The target cost reduction is £45 million by the end of September next year.
For Associated Newspapers, both display and classified advertising revenues fell by 9%, to £175 million and £53 million respectively, although DMGT claimed some recent signs of a ‘slight recovery’ in display advertising.
For Northcliffe, advertising revenues fell by 6.4% (7.5% if adjusted for the effects of a later Easter this year) and there was said to be “little sign of an advertising recovery in regional newspaper titles”.
However, revenues from Northcliffe’s digital publishing were 20% above those of the same period last year.
Both newspaper divisions saw a fall in operating profit – Northcliffe’s by £0.8 million to £39.1 million, and Associated Newspapers’ by £4.9 million to £39.1 million. But circulation revenues for the period were broadly unchanged.
Associated’s digital operations including Jobsite, Find a Property and Prime Location, fared far better that its print sector, increasing revenues by 53% to £21 million. If the effect of acquisitions made since the first half of last year is excluded, revenues increased by 26%.
Financial publishing did better than consumer publishing, with revenue growth coming mainly from the event businesses, with advertising revenue limited. Euromoney Institutional Investor increased its operating profit by £0.1 million to £15 million on revenues up 18% to £103 million. This result was achieved despite charging £2.3 million for the cost of its capital appreciation plan which was implemented in the second half of the prior year. Excluding this cost, underlying operating profit rose by 17%.
As within the rest of the group, results for the exhibitions sector varied. Consumer events struggled with operating profits for home and garden shows down 23%. Business show, conversely, performed strongly and overall operating profit rose by £0.3 million to £17.0 million on revenues up 11% to £100 million.