The UK’s largest newspaper publisher has reported an operating profit of £28.9m after seeing “strong recovery in digital advertising” following the Covid-19 crisis.
Reach plc said it is performing “materially ahead of market expectations” in its half-yearly financial report which saw the group record revenue of £290.8m compared to £352.6m in the first half of 2019 – a drop of 17.5%.
For print business, the results show print revenue declining by 20.1% to £241m, circulation revenue falling by 11.5% and print advertising dropping by 31.9% from the start of January to June 28.
However, digital revenue fell by only one per cent in the first six months of the year when the company more than exceeded its target of registering two million users on its websites. Reach reported 3.5m sign-ups and a 27.2% year-on-year increase in “average monthly loyal users” between March and August.
The publisher noted that its major restructure which announced more than 500 job losses in July is expected to save the company £35m per year, at a one-off cost of £20m.
Overall, the company reported a recovery from the Covid-19 peak with April being the month most impacted by the crisis, which saw group revenue down by 30.5%.
Jim Mullen, chief executive of Reach said: “We have seen a strong recovery in the digital advertising market since the worst impacts of Covid-19 in April which has driven a return to healthy digital revenue growth since July, assisted by increased customer engagement and loyalty.
“This illustrates the significant potential of the customer value strategy as our websites, apps and newsletters attract increased page views from our scale audience, helping to drive forward digital revenues. Circulation sales have also stabilised and shown a gradual recovery during Q2 and Q3.
“Following the implementation of the major parts of the transformation programme, Reach now has a strong foundation to drive the next phase of the customer value strategy with increased efficiency and agility in our advertising and editorial operations.
“Award-winning journalism and content enable our news brands to shape the daily conversations of millions of people. Moving forward we will see continued momentum from new and improved products.
“Our strengthened customer insight and innovation teams will assist us in driving stronger and deeper customer relationships, increasing our appeal to advertisers and driving revenue growth.
“This will enable Reach to continue to deliver for stakeholders over the long-term. With the business currently performing materially ahead of market expectations, the board is recommending an issue of bonus shares to shareholders.”