Reach PLC (LSE:RCH) saw its shares tumble as much as 28% after the newspaper publisher reported a 32% drop in interim operating profit due to record high newsprint costs.
Adjusted operating profit fell to £47.2mln in the 26 weeks to 26 June, versus £68.9mln in the year-earlier period, as newsprint costs soared about 65% as a result of higher energy prices.
The publisher, whose titles include the Mirror, the Daily Express and the Daily Star, reported a 1.6% dip in adjusted revenue to £297.4mln, but said it expects stronger circulation revenue to counter the impact of lower digital yields in the second half.
It anticipates a year-on-year improvement in total operating costs during the second half.
“While the macro-environment is naturally presenting challenges, we're committed to investing in the data and digital capabilities that are shaping the future of our business,” said chief executive Jim Mullen.
“We have acted swiftly to address the headwinds facing the business and expect the further cost efficiencies and cover price increases to mitigate the impact of newsprint inflation and reduced advertiser demand which are affecting the whole sector.”
The shares were down 27% at 85.20 pence in mid-morning trading.