- Future revenue up 36% driven by acquisitions
- ‘Modest’ growth expected for current financial year
- Shore Capital expects mid-single digit EPS downgrade
While its share price has fallen sharply in 2022, publishing firm Future’s (FUTR) stratospheric rise had been built on delivering strong earnings growth.
In that context a 6.3% fall to £13.90 makes sense given the accompanying guidance for 2023 given alongside 2022 full year earnings was for just ‘moderate’ growth - prompting forecast downgrades.
The results from the publisher of titles such as Marie Claire, Country Life and PC Gamer and owner of the Go Compare comparison site were strong on the surface. Revenue for the 12 months to 30 September 2022 was up 36% to £825 million. However, a large part of this expansion was thanks to M&A with organic growth coming in at a relatively skinny 2%.
Pre-tax profit was up 58% to £170 million, adjusted operating profit advanced 39% to £271.7 million. Of which 11% was organic growth, 10% from the platform effect and 18% from acquisitions. Adjusted operating profit margins were up from 32% to 33% year-on-year - no mean feat given the current inflationary pressures.
In September CEO Zillah Byng-Thorne announced she intends to step down by the end of 2023 and today Future said ‘good progress’ had been made in identifying a successor and that CFO (chief financial officer), Penny Ladkin-Brand, would have her role extended to group CFO and strategy officer.
WEAK SENTIMENT LINKED TO ECONOMIC BACKDROP
Net debt had crept up from half year stage from £388.7 million to £423.6 million. Future’s model has largely been built on acquiring specialist titles cheaply and plugging them into its existing platform to generate revenue from their content and brands through a mix of digital advertising, e-commerce and getting readers to click through to partnered retailers and events.
As well as suffering from growth stocks going out of fashion, the weak recent sentiment towards Future also reflects concern about the outlook for advertising in a difficult economic backdrop.
Shore Capital analyst Roddy Davidson: ‘We regard Future as a well-managed business whose strategic focus on / technological investment in leveraging content to drive ecommerce and digital advertising across an extensive portfolio of B2C brands should prove a potent medium-term growth driver. We would particularly cite the breadth and authority of its specialist content, its impressive reach and its ability to deliver high intent/highly qualified and very commercially attractive audiences as key positives.’
Davidson added: ‘We will review our model to reflect the new information provided this morning and post contact with management re. clarification of expectations for next year. On a first pass basis, modest profit growth would suggest a mid-single digit adjusted EPS (earnings per share) downgrade.’
