26th May 2016 13:01
LONDON (Alliance News) - Shares in Daily Mail & General Trust PLC fell Thursday despite reporting a rise in pretax profit for its first half, as it warned it had been hit by a further deterioration in the UK print advertising market, leading it to edge down its expectations for its operating margin in its dmg media segment.
The company now expects its operating margin for the dmg media segment to be around 10% for the full year, rather than flat on the previous year at 13% as it had previously guided. However, besides this, DMGT maintained the remainder of its full year outlook.
For the half year to end-March the company reported a pretax profit of GBP194.9 million, up from GBP126.7 million the year before, as revenue rose to GBP950.1 million from GBP919.1 million, boosted by gains from its sale of its stake in regional newspaper publisher Local World Holdings Ltd and its disposal of voucher business Wowcher Ltd.
On an underlying basis, which is at constant exchange rates and strips out disposals and one-off costs, revenue fell 1%.
A stronger performance from its Risk Management Solutions, dmg information and dmg events businesses helped to offset declines from DMGT's 68% stake in FTSE 250-listed Euromoney Institutional Investor PLC, and dmg media.
In particular, DMGT's events business was boosted by its Gastech event and the stronger dollar, and in its information business, energy information company Genscape performed particularly strongly.
Euromoney saw revenue hit by continued weakness in the energy sector and commodity markets, and DMGT said that the challenging markets Euromoney has faced in the last year continue.
In dmg media a strong performance in digital advertising revenue, up 23% on an underlying basis, was offset by a fall in print advertising, including a 15% decline in the second quarter as market conditions deteriorated. Revenue in this segment fell 7% on an underlying basis.
Circulation revenues fell 3%, due to the continued decline in the circulation of the Daily Mail and Mail on Sunday. The company increased the price of the Monday to Friday editions of the Daily Mail in February, which it said will benefit it in the second half.
DMGT said it had continued to actively manage its portfolio during the half year, making acquisitions totalling GBP20 million and sales totalling GBP112 million, including spinning Wowcher out into a new company in which it has a 30% stake, and selling its 39% interest in Local World to peer Trinity Mirror PLC.
DMGT proposed an interim dividend of 6.7 pence, up from 6.5p the year before.
"DMGT's performance in the first half was broadly in line with our expectations, other than the further deterioration in the UK print advertising market which impacted dmg media's results. The group's revenue has remained broadly stable on an underlying basis, with growth from our B2B companies offsetting the decline from dmg media," said outgoing Chief Executive Martin Morgan in a statement.
Morgan will retire at the end of the month after 27 years with the company and eight as chief executive, and will be succeeded by Paul Zwillenberg.
Zwillenberg is currently Global Leader of the Media Sector for London-based the Boston Consulting Group. Earlier in his career, Zwillenberg had been managing director of dmg media Digital.
Shares in DMGT were down 10% at 668.50 pence Thursday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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