DMGT's half-year operating and pre-tax profit fell 76% despite 5% increase in Group revenue
Companies: Daily Mail & General Trust plc Class A
Shares in Newspaper Group Daily Mail & General Trust fell 8% early on Thursday after the mid-cap reported a 76% decline in underlying pre-tax operating profit and pre-tax profit and a 27% fall in adjusted operating profit.
The fall in reported profits was due to restructuring costs and was in-line with expectations. However, today's update also showed underlying weakness in several areas of the company, with an 11% fall in underlying profits on a LFL basis due to costs at its insurance risk business RMS, and a 12% decline in print advertising revenues at the Daily Mail and Mail on Sunday.
The fall in traditional Daily Mail ad revenues was partially offset by rising digital ad revenues, which accounted for £60m of the Groups overall ad revenues.
Panmure Gordon said the results might offer some near-term relief as the numbers were broadly on track, but added that the mix was increasingly worrying:
"The DMGT portfolio has gone from ‘firing on all cylinders’ three years ago, to ‘mixed bag’ over the last 18 months, to ‘nearly everything’s struggling’."
Analyst Jonathan Helliwell said the Group's overall numbers were shored up by growth at Euromoney and ZPG, two of DMGT's holdings that have been part-divested.
He added that Panmure did not expect its EPS estimates to change much, but that there would be downward pressure to its 850p Sum Of The Parts (SOTP) estimate as structural growth continues to fade.
CEO Paul Zwillenberg said the results were broadly in-line with expectations, and that the company was encouraged by the underlying profit performance at dmg media, where the MailOnline continues to approach profitability.
"Gains across the portfolio are offset by more challenging conditions for some of dmg information's businesses and by our planned investment in growth areas such as Xceligent."
The company says it has made progress towards its strategic priorities during the period, through improving operational execution, portfolio focus, and enhancing financial flexibility.
Looking towards the second half, Mr Zwillenberg said the Board expected challenging market conditions to persist for some of its businesses.