DMGT shares dip as regional sales decline

By This Is Money
Updated: 07:31 EDT, 28 March 2011

The publisher of the Daily Mail and Mail on Sunday has made nearly 200 fresh job cuts in its newspaper publishing arm as it continues to battle declining regional sales.

DMGT: Total job losses number 520 in last five months

The Daily Mail and General Trust said it reduced the headcount in its national and regional newspaper division by a further 188 jobs in January and February, taking total job losses to 520, or 7% of the workforce, in the five months to the end of February.

Shares were down 3p (0.6%) to 500p following today's update.

Its Northcliffe Media arm, which includes some 100 regional newspaper titles, took the brunt of the cuts with 317 job losses as revenues from circulation and advertising dropped 3% and 8% respectively in the period.

Group underlying revenues were up 5% driven by a strong performance at its business to business arm, although the company said it remained cautious over the outlook for its newspaper business.

The group said the decline in advertising revenues at its embattled Northcliffe Media arm had worsened so far in 2011, falling 12% in the first two months of the second quarter. This included a 27% drop in recruitment revenues and a 12% decline in income from notices in regional newspapers.

Local newspapers have suffered falling circulation and advertising revenues in recent years following competition from the internet, with fellow regional publishers Johnston Press and Trinity Mirror having both posted gloomy updates in recent weeks.

Analysts at Charles Stanley said there were still structural issues at the Northcliffe business and added there were continued rumours the arm could be sold.

Associated Newspapers, which runs DMGT's national newspapers, saw underlying revenues from circulation drop 2% even though both the Daily Mail and The Mail on Sunday increased their market share. Underlying advertising revenues grew 5% at the division, but weakened to 2% in 2011 as the business hit tougher comparatives from a year ago.

A 4% rise in digital advertising helped offset more 'subdued and volatile' print advertising, the group said. Its business-to-business arm saw revenues increase 11% after strong growth from events catering for the energy and marketing sectors and its Surf Expo show in the US.

DMGT, which also publishes the Metro newspaper, said operating profits for the first six months of its financial year were likely to be ahead of the previous year. But it added there was continued uncertainty on the outlook, particularly for its consumer division, due to fragile consumer confidence and wider economic conditions.

Analysts at Singer Capital Markets said: 'Overall, the negative news on consumer advertising will come as no surprise after the Trinity and Johnston statements, although we hoped that DMGT would have performed a little better in regionals due to its geographic exposure.'