Statutory pre-tax profit at publisher Daily Mail & General Trust (DMGT) fell 81% last year to 30 September 2019, which may leave many investors puzzled as to why the share price is up 3.5% to 826p.
The profits plunge looks alarming but it also reflects the impact of disposals in the previous financial year, and the loss of revenue from disposed businesses.
Underlying adjusted pre-tax profit growth was up 19% to £140m. The company says it expects no revenue growth in 2020 and a fall in the operating margin to 10%.
CEO Paul Zwillenberg says: ‘We are now in the next phase of the group's transformation, optimising our business through targeted and disciplined investment whilst maintaining significant financial flexibility to enhance shareholder value.
‘The recent acquisition of the 'i' demonstrates the opportunities we have to invest in high quality, content-led businesses with a compelling strategic and financial rationale.’
The purchase of the ‘i’ newspaper from JPI Media for £49,6m, may have come as a surprise to some given Zwillenberg’s background in digital media. Although it has a website, it is more closely associated with its print version.
Numis analyst Gareth Davies says: ‘DMGT has this morning reported results that have come in a little ahead of our estimates. Top line as expected, margin a little stronger driven by small beats at RMS, Energy and Property. Outlook suggests flat group top line and 10% margin (investment).
