The publisher of the Mirror and Express newspapers in the UK has swung to a half-year loss after a slowdown in local advertising forced it to write down the value of its regional titles.
Reach – formerly known as Trinity Mirror – has reported a £113.5 million (€127.5 million) statutory pre-tax loss in the first half of the year, having logged profits of £38.2 million (€42.9 million) a year earlier.
It was hit by a £150 million (€168.5 million) impairment charge that was the result of a “more challenging than expected outlook” for its regional businesses, which have faced a slowdown in local advertising.
The company said there is now “greater uncertainty” for its regional titles over the medium term.
It still believes there are “significant benefits” in the scale of its local digital audiences, with opportunities to grow revenue and profit further ahead.
It is the first half-year results released by the company since its acquisition of the Express and Star newspapers from Richard Desmond’s Northern & Shell in February.
The takeover boosted group revenues, which grew from £320 million to £353.8 million as print and digital revenue rose by 10.6% and 16.9%, respectively.
On a like-for-like basis, print revenue fell by 9.3% while digital grew 6%.
Reach chief executive Simon Fox said: “We have delivered a positive financial performance in what remains a difficult trading environment for the industry, in particular the regional businesses.
“The benefit of improved performance from national print advertising coupled with further cost mitigation will support profits over the year despite a further increase in newsprint prices for the second half.
“We have started the process of integrating Express and Star in order to accelerate the benefits that our combined scale will deliver and have a clear strategy which fully reflects the changing shape of the group.”
Reach shares were down more than 3% in morning trading.
The publisher also put aside another £7.5 million (€8.4 million) to deal with higher than expected civil claims over the phone-hacking scandal.
The money includes the costs of having to cover claimants’ legal expenses.
It brings the total amount put aside for settlements to £70.5 million (€79.2 million).
In an update to current trading, the company said revenue in July alone is expected to fall by 7% on a like-for-like basis.
Reach expects full-year trading to be in line with market expectations as cost savings and “synergies” from its takeover of the Express and Star newspapers help offset higher newsprint prices over the second half of the year.
- Press Association