Newspapers group Reach PLC (LON:RCH) said digital and print revenue in the first four months of the year was slightly ahead of management’s expectations.
The owner of the Mirror and Express titles expects operating profit for the full year to be slightly ahead of market expectations.
The group said digital revenue grew by 35.0% in the period compared to a year earlier. Print revenue declined by 10.4% on the back of a 7.9% decline in circulation.
The group’s revenue for the period was 3.1% lower than in the corresponding four months of 2020 – a period in which the coronavirus pandemic started to disrupt the business.
Reach said the number of registered customers now stands at 6.2mln and remains well on track to reach 10mln by the end of 2022.
In its trading update, the group said the business is performing well with strong progress on all of management’s strategic objectives.
“We have had a positive start to the year and are seeing the benefits of last year’s transformation programme. With digital now accounting for more of our advertising revenues than print and growing strongly, we are well placed to make further progress during 2021. We have a strong balance sheet and are now increasing investment to accelerate delivery of the Customer Value Strategy, focusing on the use of enhanced customer insight to drive engagement and support our medium-term objective of doubling digital revenues,” said Jim Mullen, the chief executive of Reach.
Shares in Reach were up 0.5% at 221p in the first hour of trading.
Peel Hunt (PH) increased its target price to 220p from 200p and reiterated its ‘hold’ recommendation.
“The period is now lapping the Covid-hit April 2020 (Digital growth in April of 78.4% vs a decline in April 2020 of 22.5%). Compared to 4M19 digital was up 41% and print down 24%. Thanks to the growth in digital revenues and continued benefit of last year’s major transformation programme, the company expects operating profit to be slightly ahead of consensus (£137.1m, vs PHe £138.7m). We believe there is room to increase this modestly, 1-2% perhaps. Overall, we consider it a positive start to the year, with momentum in digital likely to build in H2,” the broker said.