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Reach surges as it says 2018 results will be “marginally ahead” of expectations

Last updated: 09:27 14 Dec 2018 GMT, First published: 08:01 14 Dec 2018 GMT

Tabloids
Reach owns the Daily Express, the Daily Star, and the Daily Mirror

Shares in newspaper group Reach PLC (LON:RCH) surged in early trading Friday after saying its 2018 performance will be “marginally ahead of market expectations” as revenues were boosted by its acquisition of the Express and Star papers over the summer.

In a trading update, the firm said revenues in the fourth quarter grew by 23% reflecting its acquisition, although on a like-for-like (LFL) basis it was expected to decline 5%.

READ: Publishing giant Reach confident in hitting full-year targets with integration of Northern & Shell “on track”

Circulation revenue and publishing print advertising revenue was also expected to fall by 4% and 15% respectively on an LFL basis while publishing digital revenue was expected to grow by 5% with display and transactional revenue growing by 8% LFL.

Reach also said that the integration of the Express and Star was “progressing well” and it expected to deliver £3mln in synergy savings in 2018, ahead of the £2mln forecast in October and on track for at least £20mln per year by 2020.

The company acquired the two papers in June for £127mln after it agreed to buy out Northern & Shell Group.

The company also disposed of two vacant properties in the quarter, generating £5mln in proceeds which when combined with “continued strong cash generation” meant net debt was expected to fall by £55mln at the end of the year, down from £81mln in the half year.

Simon Fox, chief executive of Reach, said the firm would “head into 2019 having made good progress with the integration of Express & Star” and had “clear plans in place for driving digital growth in the year ahead”.

In a note to clients, analysts at City broker Peel Hunt retained their ‘Buy’ rating and 190p price target while upping its pre-tax profit forecasts for 2018 to £137mln from £133mln, adding that the expected £55mln net debt position was “substantially better than expected”.

Shares were up 6.6% at 60.8p.

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