Reach PLC (LSE:RCH) climbed almost 8% on Thursday morning as the British tabloid publisher pins its hopes on England's Euro 2024 campaign and the Olympics as catalysts for print and online ad spending in the coming months.
The Mirror-owner's optimistic forecasts for the year ahead overshadowed news of lower first-quarter revenue. Both digital and print revenue fell over the first three months of the year, the publisher said on Thursday, by 8.5% and 6% respectively. It left the newspaper group's revenue 6.7% lower for the first quarter, with advertising taking a hit in particular.
Nonetheless, improved ad yield metrics and better margins thanks to cost-cutting helped Reach distract from the recent shortfall in revenue as it points to a potential for better trading as a key trading period approaches.
“With events like the European Football Championships, Olympics and elections round the corner, we have the opportunity to generate high levels of interest by entertaining and informing our audiences with brilliant journalism," chief executive Jim Mullen said in a statement.
Recent challenges for the publisher included the impact of what it described as a deprioritisation of news by major platforms last year' which Reach said has lessened this year.
The company told investors it is set to meet market expectations for a £97.6 million adjusted operating profit, versus £96.5 million last year. It comes as Reach has been cost-cutting, targeting 5-6% of savings, and the company said it was 'on-track' with these initiatives.
“The decision to take cost action early, alongside the continued implementation of the customer value strategy, is delivering a growing yield performance," Mullen added.
“This gives me confidence that we can continue to navigate current market conditions."
In London, Reach shares traded up nearly 8% in Thursday's early deals to change hands at 80p each.
Market watchers, meanwhile, struck a supportive tone in the initial reactions to the results.
"The revenue line continues under pressure, but the more directly controllable, data-driven revenues are making up more of the mix, improving the quality of the earnings," Fiona Orford-William, of research house Edison, said. "Along with the group's very tight hold on costs, this is generating the margin improvement that is supporting the operating profit line.
"The revenue comparatives ease as the year progresses and there are plenty of events in the calendar that should stimulate interest both on- and offline.”