Newspaper publisher Daily Mail & General Trust (DMGT) beat forecasts with an 8 per cent rise in annual profit, but said it was contemplating the possibility of selling its regional newspaper business.
Pre-tax profit before amortisation and impairment of intangible assets and exceptional items was �253.4 million for the year to October 2, up from �234.1 million the year before, a DMGT statement said on Wednesday. The average forecast of 10 analysts taken from the company's website had been for a profit of around �248.9 million and a range of �244.8 million to �256.9 million.
The owner of the Daily Mail and Evening Standard tabloids said it was conducting a review of its regional newspaper division, Northcliffe Newspapers, which publishes over 100 titles in the UK. It had now decided to look into the possible sale of the regional newspaper division and that it intended to return a substantial portion of the proceeds to shareholders if a sale went ahead.
"Given the strategic importance of Northcliffe within the regional newspaper industry," the DMGT board decided to explore whether greater shareholder value can be achieved through a sale of the business. The board has appointed Greenhill & Co. International LLP to assist in this process.
The Daily Mail and The Mail on Sunday increased their share of a declining market. The average circulation of the Evening Standard for the six month ABC period to September was up 12 per cent, including the Lite edition, launched in December 2004. The free Metro continued to show strong growth in profit and return on sale.
Ireland on Sunday's circulation fell 9 per cent as DMGT reined in promotional expenditure. Associated Newspapers' overall circulation revenues for the year were 3 per cent below those of last year (1 per cent on a fifty-two week basis). After adjusting for the extra week last year, Associated's total advertising revenues increased marginally as a result of the difficult market conditions in the second half of the year.
Display was down 0.7 per cent, classified was down 6.2 per cent, but Internet-related revenue was up 74 per cent (including Find a property, which was acquired at the start of the financial year). The Daily Mail was down 3.4 per cent, The Mail on Sunday was down 2 per cent, but Metro was up 13.8 per cent. The Evening Standard was down 7.1 per cent mainly due to the continued weakness of its recruitment advertising. Colour advertising was up 7.5 per cent.
Northcliffe Newspapers achieved operating profits of �102 million in 2005, �1 million or 1.5 per cent ahead of last year on revenues broadly unchanged at �520 million, despite one less week's trading and notwithstanding an increasingly challenging advertising market. Northcliffe's advertising grew by 2 per cent, declining in the second half of the financial year after an encouraging start due to a slowing economy and a decline in public sector spending.
The downturn in advertising affected most of Northcliffe's publishing centres, although Aberdeen saw its profits rise by 18 per cent on the back of a buoyant local economy and Bristol was up by 10 per cent driven by cost savings. UK circulation revenues increased by 1.6 per cent, excluding the impact of the extra week last year.
Northcliffe's titles continued to show gentle declines in circulations but, together with its wider portfolio of products and services, Northcliffe maintained the highest reach of any media in its core market places. Northcliffe's Internet operation moved into profit for the year. Traffic to its sites is now running at 1.7 million unique users and revenues are growing strongly.
"The advertising markets experienced by the group's UK newspaper businesses show no sign of recovery yet. Even in the absence of any recovery, the group's longstanding strategy of reducing its dependence on traditional UK advertising markets leads the board to look forward to another year of progress," Daily Mail said in the statement.
"Our national newspapers have continued to increase their market shares, despite fierce competitive circulation activity within the national market," it added. Ad sales at Daily Mail's national business have declined 5 per cent so far this fiscal year, and recruitment ad sales at the publisher's regional newspapers have fallen 20 per cent, Bloomberg reported.
Analysts have been sceptical about the company's growth prospects given a tough advertising market, but they have been more confident about its non-newspaper businesses, including online operations.
