- Digital business set to outperform says Panmure Liberum
- Due to report full year results on 4 March
- Year-to-date shares up 7%
Shares in Reach (RCH) soared 25% to 90p in early morning trading as the newspaper publisher said it expects to deliver results ahead of current market expectations for the full year.
Back in October 2024 the publisher said it was confident in delivering full-year guidance due to further digital growth.
Digital revenue increased by 2.5% in the third quarter, but print revenue fell 3.9%, including a 9.1% decline in advertising sales while circulation revenue decreased 1.9%.
In a brief fourth quarter trading update the company said it had completed refinancing a revolving credit facility of £145 million with a four-year maturity to December 2028, including an option to extend by up to one year.
The company also referenced a legacy pension scheme – West Ferry Printers Pension scheme – inherited in 2018 when it bought the Express newspapers.
‘As part of the due diligence to prepare the WF Scheme for buy-out, a historical error has been discovered resulting in an estimated £5 million additional funding requirement, which we expect to pay in 2025.’
Reach is scheduled to report full year results on 4 March.
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Johnathan Barrett analyst at Panmure Liberum said: ‘Given the health of the digital advertising market particularly around peak period, centred on Black Friday, we expect the digital business to have outperformed.
‘Reach has an excellent record on achieving or exceeding costs guidance. The company had already flagged it was doing well in its last update and so we expect it to have outperformed for the full year and build in just over £2 million extra savings.
‘We hold 2025 expectations ahead of seeing more detail on first quarter trading trends and after reflecting on the NI (national insurance) factor ahead of detail on what the company plans for costs in 2025.’
Russ Mould, investment director at AJ Bell said: ‘The publisher of the Daily Mirror and Daily Express has faced the difficult task of trying to get newspapers to work commercially in the 21st century. Years ago, print titles could count on plenty of advertising revenue to help fund their activities, but that is no longer the case.
‘As well as pushing its digital strategy, Reach has been stripping out costs at will. The issue with this strategy is the diminished quality of the product, which in turn makes it a less attractive venue for advertisers, whether online or in print. The market will want to see evidence of how the recent changes in the Budget might affect the company’s staffing cost base.
‘The pension issue is clearly one the market is relaxed about for now; however, it is a reminder of the legacy issues the company has to contend with.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Martin Gamble) own shares in AJ Bell.
