REG - Reach PLC - Trading Update

ReachAnnouncement

11/10/2022 07:00

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RNS Number : 4053C  Reach PLC  11 October 2022

 

 

11 October 2022

Reach plc - Q3 trading update for the 3-month period to 25 September 2022

Data-led strategy continuing to deliver; improved digital growth momentum
during July &
August

                                                 Q3                 YOY  %                                   July & August      September

                                                                                                             YOY %              YOY %
 Digital Revenue                1.1%                                                                         5.9%               (8.1%)
 Print Revenue                  (2.9%)                                                                       (2.8%)             (3.0%)
 -     circulation rev          2.0%                                                                         0.5%               4.3%
 -     advertising revenue      (23.1%)                                                                      (17.0%)            (32.2%)
 Group Revenue                  (1.9%)                                                                       (0.5%)             (4.1%)

 

·    Improved year on year group revenue trajectory versus Q2 driven by
both print and digital

·    Q3 and September revenue performance distorted by impact of the
passing of HM The Queen which benefited circulation but significantly reduced
advertising due to the blackout during national mourning

·    July and August more indicative of underlying revenue performance:
print down 2.8%, digital up 5.9%

·    Cover price increases and efficiencies support stronger than historic
H2 weighting of profit

Digital revenue  - improving underlying performance

Digital revenue for the period was up 1.1%. Revenue up by 5.9% in July and
August reflects ongoing momentum in data-led initiatives, continued growth in
page views (6% across the period) and stabilisation in comparative
programmatic yields as Q2 headwinds moderated. Customer engagement has
continued to grow with page views per user and registered page views up during
the period, while our total registered customer base is now over 12m. Revenue
decline of 8.1% in September was due to an industry wide reduction in
advertising spend following the passing of HM The Queen, with multiple brands
deferring or cancelling scheduled campaigns during the period of national
mourning.

Print revenue  -  cover price increases support expected uplift in
circulation

Print revenue for the period declined by only 2.9%. Circulation revenues were
up by 2.0% following recent price increases, with volumes responding as
anticipated. Circulation in September was up 4.3% reflecting a material
one-off uplift, The Express and The Mirror growing aggregate volumes by around
30% on the day following the Queen's passing and the day after the funeral.
This upside was more than offset by an associated reduction in print
advertising, which was down by 17.0% in July and August, but 32.2% in
September.

Given all the above, the estimated overall net effect (print and digital) on
trading for September was around a 5% reduction in revenue.

Newsprint inflation as expected; cost management actions progressing

We have seen more stability in the cost of newsprint during the period. Cost
management actions taken during H1, including reductions in print pagination
and supply, along with the operating model changes, outlined in our interim
results, are helping to offset persistent inflationary pressures.

 

Outlook

The macroeconomic and political climate is volatile, and we are mindful of the
potential impact of changing consumer behaviour on trading, given this
uncertain external environment. Although the unusual period of trading during
September impacted revenue and profit, underlying revenue trends during Q3
were broadly as anticipated heading into Q4, historically the strongest period
for advertising. We expect circulation revenue to be supported by increased
cover prices, while advertising revenue should benefit from seasonally
stronger yields, particularly around Black Friday and Christmas and from the
football World Cup which starts in November.

 

 

Jim Mullen Chief Executive

"We have made further good strategic progress as we continue to deliver
quality content to a growing and increasingly engaged digital audience. I am
particularly proud of our teams who worked so tirelessly over recent weeks to
produce such comprehensive, respectful, and sensitive coverage of the Queen's
passing, a truly once in a generation event. Actions on costs are helping to
mitigate inflationary pressures and while macro uncertainty persists, improved
revenue trends during Q3 are a positive. The strength of our balance sheet
underpins ongoing investment in the strategy, as we continue to transition to
an increasing mix of higher quality digital earnings."

                                Q1 YOY                     %                      Q2 YOY   Q3 YOY

                                                                                  %        %
 Digital Revenue                10.4%                                             0.3%     1.1%
 Print Revenue                  (3.9%)                                            (3.9%)   (2.9%)
 -     circulation rev          (6.2%)                                            (4.0%)   2.0%
 -     advertising revenue      (8.5%)                                            (11.4%)  (23.1%)
 Group Revenue                  (0.5%)                                            (2.8%)   (1.9%)

 

Enquiries

 Reach                                                communications@reachplc.com
 Jim Mullen, Chief Executive Officer
 Simon Fuller, Chief Financial Officer
 Lija Kresowaty, Head of External Communications
 Matt Sharff, Investor Relations Director             +44 (0)7341 470 722

 Tulchan Communications                               reachplc@tulchangroup.com
 David Allchurch/Giles Kernick                        +44 (0)207 353 4200

 

LEI: 213800GNI5XF3XOATR61

Classification: 3.1 Additional regulated information required to be disclosed
under the laws of a

Member State

 

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