Reach PLC (LON:RCH) saw its revenues in April plunge by almost a third despite what it said was an “unprecedented demand for news” as the coronavirus lockdown slashed advertising spending.
In a trading update on Thursday, the owner of the Daily Mirror and Daily Express reported that over April, the first full month with lockdown measures in place, revenues had tumbled 30.5%, with print revenues down 31.8% and digital slumping 22.5% as higher page volumes were unable to offset declines in advertising yields.
READ: Daily Mail and Reach both warn of adverse impact of coronavirus on recent trading
“While in some areas we have recently seen a stabilisation in trends, circulation remains significantly below pre-[coronavirus] levels and advertising remains very challenging and uncertain, with regional advertising particularly impacted”, the company said.
For the four months to 26 April, Reach reported that revenues were down 13.1%, and despite having started the year well, the pandemic had caused declines in circulation sales, a fall in print advertising at national and local levels, event cancellations and falling digital yields as advertising demand fell.
However, the company said it had witnessed an unprecedented demand for news over the period, with April seeing total page views of 1.7bn, up 57% year-on-year.
Looking ahead, the company said its revenue performance for the year is expected to be “significantly impacted” by the pandemic, although a number of cost-saving measures were expected to “partially protect profitability levels and cash generation”.
Reach also kept its guidance suspended due to “continued uncertainty about the severity and length of the crisis”.
“Our teams continue to focus on producing the award-winning journalism and content that is so valued by our customers at this critical time. We continue to build on our position as the UK's largest commercial national and regional news publisher”, said chief executive Jim Mullen.
“Our strategy is now even more relevant than before the crisis so we are accelerating plans to drive digital engagement and capture the customer insight and data that is so key. This will ensure a strong and sustainable future for Reach's trusted news brands", he added.
However, in a note on Thursday, analysts at Peel Hunt said while trading had been “tough”, it was “not worse than expected” and retained their ‘add’ rating and 150p price target on the stock.
“Our forecasts may fall further today, but against a TV market decline of c40% in April this is not a materially worse outcome than feared”, the broker added.
Investors appeared to concur with the assessment as the shares jumped 9.8% to 77.8p in early trading.