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Daily Mail and General Trust surges as consumer media business has good first half

Group revenue for the six months to 31 March was £724mln, a decrease of 3% year-on-year, reflecting the effect of disposals. On an underlying basis, revenue grew 1%.

Daily Mail
The shares were up sharply in early deals

Shares in publishing and exhibitions group Daily Mail and General Trust PLC (LON:DMGT) surged on Thursday after an encouraging outlook statement in its interim results.

The shares were up more than 7% after the company unveiled underlying revenue growth of 1% year-on-year in the six months to the end of March.

READ Daily Mail & General to distribute stake in Euromoney and £200mln in cash to eligible A share holders

Adjusted profit before tax fell 3% to £100mln from £103mln the year before but was up 19% on a like-for-like basis.

Reported profit before tax more than halved to £50mln from £113mln 12 months earlier.

The company said lower consumer media revenue growth and operating margins are expected in the second half of the financial year but as a result of the good first-half performance, the underlying rate of revenue decline for the full year is now expected to be in the low-single digits (in percentage terms) rather than the mid-single digits previously guided to.

The consumer media full year operating margin is still expected to be in the high-single digits, the company said.

The business-to-business (B2B) divisions are collectively still expected to deliver a full year underlying revenue growth rate in the low-single digits and an operating margin in the mid-teens, due to higher planned investment in the second half.

"DMGT delivered a good performance in the first half of the year, achieving underlying growth in revenue, cash generation and profit. Consumer Media delivered a particularly strong performance and we saw continued growth in our B2B portfolio,” said Paul Zwillenberg, the chief executive officer of DMGT.

“The strategy we are pursuing is transforming DMGT and delivering results. The distribution of our stake in Euromoney and the £200mln special dividend was a defining moment for DMGT. We returned nearly £900mln, or 38% of our market capitalisation, to our shareholders. Our balance sheet remains strong despite this considerable capital return and an additional £117mln made available to our pension schemes. We are confident we can invest for growth and maximise the portfolio's true potential, continuing the transformation we started three years ago,” he added.

“Consumer Media delivered a strong performance in the first half. Given the inherent lack of visibility of our advertising revenue streams, exacerbated by the uncertain macro environment, we remain cautious about the remainder of the year. Guidance for B2B remains unchanged with higher planned investment in the second half, notably in RMS. The board remains confident that the group's strategy and strong balance sheet will, over the medium term, deliver consistent earnings growth to underpin DMGT's long-standing commitment to sustainable annual real dividend growth," he concluded.

In mid-morning trading, shares in DMGT were 9.3% higher at 738p.

In a note to clients, analysts at Numis Securities repeated their 'buy' rating and 877p target price on DMGT and said they see a "small risk on the upside to estimates".

 -- Adds share price, analyst comment --

Quick facts: Daily Mail and General Trust

Price: 841 GBX

LSE:DMGT
Market: LSE
Market Cap: £1.75 billion
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