The update reveals that group revenue is down 0.9% year-on-year. Digital revenue is up 9.3% over period, but this is overshadowed by a 4.2% decline in print, including a 10.1% fall in advertising and 5.7% decline in circulation revenue.
As reported by Reach plc:
- Strategy enabling strong growth of higher yielding PLUS+ products; enhances quality of digital revenues
- More challenging market impacts digital growth rate; market yield reflecting lower advertising demand
- Print remains resilient with action on cover prices to further strengthen circulation revenue
- Mitigating actions in place to help offset the impact of further newsprint inflation
Continued strategic progress and digital revenue growth
Over the past two months the market has experienced reduced advertiser demand and lower average yields, with the war in Ukraine significantly reducing the level of ‘brand safe’ content for news publishers. While this has led to lower growth than expected, we are improving the quality of our digital sales, with strong growth in our higher yielding revenues, such as PLUS+, becoming a bigger part of the mix. PLUS+ data has also recently been added to the online marketplaces of three of the largest advertising agencies and we’re continuing to enrich customer profiles and use technology, like our AI contextual tool Mantis, to encourage more customer time on site.
Investing while addressing the impact of inflation
We’re continuing to invest in the Customer Value Strategy, with the reshaping of our cost base supporting investment in data and technology. However, since the middle of March, we have seen further inflation in operating costs, particularly within print, where the impact of newsprint (paper cost) increases will now exceed our previous expectations. We have taken additional measures to help offset this including, the acceleration of efficiency plans, changes within print production and actions around print cover prices.
We still anticipate broadly flat group revenue for the year, though with a higher mix of circulation revenues and lower digital contribution than previously expected as a result of more challenging trading conditions. The impact of further recent newsprint inflation is fully reflected in our cost expectations for the current financial year, with actions now underway to help mitigate the impact on operating profit.
Jim Mullen, Reach plc Chief Executive Officer: “We’re developing a more sustainable and profitable long-term future for the business, with delivery of the strategy progressing well, despite a more challenging economic backdrop. The effective collection and use of data are supporting the growth of our higher yielding digital products, which are becoming an increasing part of our revenue mix. We’ve taken swift action to address the impact of inflation on our cost base and the business remains strongly cash generative, supporting the investment in data and technology that is key to future growth.”
Keep up-to-date with publishing news: sign up here for InPubWeekly, our free weekly e-newsletter.