Newspaper group Reach PLC (LON:RCH) has reported a rise in revenues so far this year, boosted by last year’s acquisition of the Daily Express and Daily Star titles.
In the four months to the end of April, revenue rose 4.4%, helped by a full contribution from the Express and Star, which were acquired last February.
On a like-for-like basis, group revenue fell 6.4%, although bosses were keen to highlight that was an improvement on the 7.8% drop registered in the first four months of 2018.
READ: Reach tops recently-upgraded forecasts
Unsurprisingly, like-for-like print revenue declined 7.8% as advertisers divert money away from papers amid falling circulation.
That more than offset like-for-like growth of 8.4% in the digital division. Further growth is expected in digital, with a series of new initiatives currently underway.
As for the integration of the Express and Star titles, Reach remains confident in delivering annual savings of at least £20mln by next year.
Net debt at the end of April reduced to £22.2mln, following the early repayment of a £20.3mln loan which wasn’t due until December. Cash on hand totalled £17.5mln.
“I am pleased with the solid start to the year and the positive improvement in revenue trends,” said chief executive Simon Fox.
“Our early term loan repayment demonstrates the continued success of the Express & Star acquisition and the strong cash generation of the group.
“We also continue to make good strategic progress, most importantly with a range of digital projects to drive both page views and revenue, the effects of which we expect to see in the second half of the year.”
Digital needs to pick up
“A solid start to the year with cash generation pleasing but digital growth still falling short of the necessary level,” said City broker Peel Hunt.
“There will be no changes to our numbers today, although debt and Express & Star synergies look increasingly conservative numbers. We place our long-standing TP under review.
“The recent rally in the share price places the stock on 2x PE. What will drive this rating upwards from here will be a more convincing strategy in digital, which delivers revenue growth that really moves the needle.”
Shares rose 1.6% to 77.4p on Thursday morning.