The newspaper groups that publish the Daily Mail and the Daily Mirror have both warned that trading performance has been hit by the coronavirus outbreak.
Daily Mail and General Trust PLC (LON:DMGT) suspended its full-year guidance after revealing that it has started to see the effects of the measures implemented to combat the spread of the coronavirus (COVID-19), especially on its Events and Exhibitions and Consumer Media businesses.
DMGT’s trading for the first five months of the half-year to the end of March had been in line with expectations.
Revenue in the five months to the end of February was up 3% year-on-year on an underlying basis, in line with expectations. The business-to-business side of the group saw underlying growth of 4% while Consumer Media titles saw underlying growth of 1%, including a 19% increase in digital advertising.
DMGT's balance sheet strength, including £363mln of gross cash and £374mln of committed undrawn bank facilities, provides financial resilience and enables it to continue to adopt a long-term approach, the media group said.
Reach PLC (LON:RCH), which publishes the Daily Mirror and the Daily Express, said it was too early to assess the expected impact that the COVID-19 impact would have on the current fiscal year and beyond but it acknowledged that the principal trading areas expected to be affected are advertising, print circulation and events.
Advertising revenue deferrals may be expected given its discretionary nature, print circulation will be hit by footfall reductions and closures of outlets and events delays or cancellation may be necessary, the media conglomeration conceded.
Trading in the first 12 weeks of this year had been in line with expectations, Reach said. The company said it has actively shaped business operations to best adapt to the current trading environment. This has included broadening its interactions with customers (via apps and newsletters), alongside offering more convenient options for its printed products, with an increase in home delivery.
Like DMGT, Reach emphasised its balance sheet strength.
“Through strong cash generation in 2019, the prior year net debt balance had become net cash of £20.4mln and new four-year revolving banking facilities of £65mln had been agreed (with a 1.75x EBITDA [underlying annual earnings] covenant),” Reach said.
So far, there are no plans to follow the lead of some other companies and bin the recently announced full-year dividend.