REG - Reach PLC - Trading Update

ReachAnnouncement

11/01/2023 07:00

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RNS Number : 3134M  Reach PLC  11 January 2023

 

Reach plc - Q4 trading update for 3-month period to 25 December 2022
 

Strategy delivering more sustainable and digitally led future

Expect challenging market to continue in 2023; disciplined cost reduction plan
to help mitigate impact

                                     Q4 YOY(1)     FY 2022(1)
 Digital Revenue                (5.9%)             1.0%
 Print Revenue                  (3.6%)             (3.5%)
 -     circulation rev          1.8%               (1.7%)
 -     advertising revenue      (20.2%)            (15.9%)
 Group Revenue                  (4.2%)             (2.3%)

Jim Mullen Chief Executive

"While the macroeconomic environment remains challenging for the whole sector,
we are continuing to deliver on our strategic priorities. Consistent growth in
audience engagement, an increasingly active user base and a growing pool of
customer data is supporting a higher quality digital mix, with data-led,
strategically driven revenue c. 30% of our digital business.

Page view growth for the year of 4% is outperforming the publishing sector,
our registered customer base of 12.5m is now 25% of our UK audience and with
the expansion of our footprint in the US, we're confident that this will drive
more sustainable growth for the long term.

We expect current market headwinds will continue during 2023 and have
therefore taken decisive action, putting in place a further cost reduction
plan. This will ensure we retain our strong foundations and are able to
continue investing in our digital growth priorities, which position us to
benefit strongly when the economic environment improves."

Q4 trading - circulation revenue strong, advertising revenue lower than
expected

Circulation revenue for the period grew by 1.8%, continuing to benefit from
cover price rises earlier in the year, though this was more than offset by
digital and print advertising which were lower than forecast. This was largely
due to a significantly lower than anticipated benefit from traditionally
stronger programmatic yields and campaign spend around Black Friday and
Christmas, which has affected the whole sector. More broadly, we have also
seen the continued impact of macroeconomic and consumer uncertainty, reflected
in slowing market demand for advertising.

Digital revenue and print advertising for Q4 declined by 5.9% and 20.2%
respectively (July-August(2) digital grew 5.9% and print advertising declined
17.0%).

Lower than forecast group revenue in Q4 and the less profitable revenue mix of
stronger circulation but lower advertising, is expected to impact profit and
the Board now expects operating profit for FY22 will be below the current
market consensus(3) by mid-single digits %.

Cost reduction plan to mitigate profit headwinds and protect digital
investments

Near-term, economic conditions remain  uncertain, creating unavoidable
headwinds for the whole sector, with advertising weakness and prolonged cost
inflation. The business has however established a consistent track record of
disciplined cost control and efficiency savings. During 2023 we are currently
targeting further savings of at least £30m to help mitigate the impact of
macro pressures and support our investment in transitioning to a more
digitally-led and profitable future for all stakeholders.

These will be generated throughout the business and include; simplification of
central support functions, supply chain efficiencies in print and
distribution, and accelerated removal of editorial duplication.

The business is scheduled to report results for FY22 on 7 March 2023.

The business also confirms that new Chief Financial Officer, Darren Fisher,
will join the business effective from 1 February 2023.

 

Enquiries

 Reach                                            communications@reachplc.com
 Jim Mullen, Chief Executive 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

 

 

Footnotes

(1) Q4 and FY22 year-on-year revenue movements are subject to completion of
FY22 audit

(2)  Q3 performance distorted following the passing of HM The Queen in
September

(3) Current market consensus, as published on the Reach plc website, shows the
average of analyst expectations for Group revenue at £602.5m and operating
profit of £112.8m for FY 2022

 

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