Reach (RCH)

Sector:

Media

Index:

FTSE Small Cap

101.40p
   
  • Change Today:
      1.10p
  • 52 Week High: 420.00p
  • 52 Week Low: 95.45p
  • Currency: UK Pounds
  • Shares Issued: 315.06m
  • Volume: 912,564
  • Market Cap: £319.48m

Reach sees 'modest' hit from newsprint inflation

By Frank Prenesti

Date: Tuesday 01 Mar 2022

LONDON (ShareCast) - (Sharecast News) - Daily Mirror publisher Reach said higher newsprint inflation would result in a 'modest' hit to 2022 operating profit as it reported a rise in annual earnings last year.
The company on Tuesday reported a 9.2% rise in adjusted operating profit to £146.1m for the year to December 26. Revenue rose 2.6% to £615.8m. Investors took a more pessimistic view of the outlook and marked the shares down by almost a quarter.

Reach, which is shifting its focus to digital output, said the impact from inflation, which began to affect the business towards the end of 2021, had intensified, particularly in print production as print costs rose to £53m from £46m.

"This has primarily been reflected in the cost of newsprint, which having previously been impacted by rising distribution costs and supply challenges, now also reflects the significant increase in energy prices. As a result, the gross impact of inflation in 2022 is expected to be higher than in recent years," the company said.

"While ongoing efficiencies are expected to partly mitigate this impact, we anticipate the net effect to be a modest year-on-year reduction in operating profit as we continue to invest for the future. We expect digital revenue growth to again offset print decline, with total revenue flat for the full year 2022."

Peel Hunt analysts said they expect the inflation hit to see pre-tax profits drop 6% to £134.3m this year.

"We feel the inflationary impact may well endure, so impacting 2023 as well, though further cost-saving measures will surely be brought to bear," they wrote in a note, but added that the downside from here was "limited".

Reach, which also publishes the right-wing Daily Express, said the higher newsprint cost reflected cuts in industry capacity and a surge rebound in demand after the height of the Covid pandemic.

"Growing demand for packaging materials, reduced availability of recycled fibre and increasing costs of shipping and energy contributed to a significant increase in newsprint prices versus 2020," it added.

Brokers at Numis rated the shares a 'buy' but cut adjusted operating profit estimates to £138.7m from £149.8m, with adjusted earnings per share of 35.5p compared to 38.5p, given a "backdrop of significant print cost base inflation, and assuming no cut to investment".

They also lifted 2022 revenue forecasts to £615.8m from £608.9m based on "a strong 2021 revenue that is better than modelled, and confident outlook, particularly with regards to digital momentum".

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Reach Market Data

Currency UK Pounds
Share Price 101.40p
Change Today 1.10p
% Change 1.10 %
52 Week High 420.00p
52 Week Low 95.45p
Volume 912,564
Shares Issued 315.06m
Market Cap £319.48m

Reach Star Ratings

Compare performance with the sector and the market.
more star ratings
Key: vs Market vs Sector
Value
96.60% above the market average96.60% above the market average96.60% above the market average96.60% above the market average96.60% above the market average
100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average
Price Trend
53.49% below the market average53.49% below the market average53.49% below the market average53.49% below the market average53.49% below the market average
74.07% below the sector average74.07% below the sector average74.07% below the sector average74.07% below the sector average74.07% below the sector average
Income
98.62% above the market average98.62% above the market average98.62% above the market average98.62% above the market average98.62% above the market average
100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average100.00% above the sector average
Growth
16.23% above the market average16.23% above the market average16.23% above the market average16.23% above the market average16.23% above the market average
32.08% above the sector average32.08% above the sector average32.08% above the sector average32.08% above the sector average32.08% above the sector average

What The Brokers Say

Strong Buy 4
Buy 0
Neutral 1
Sell 0
Strong Sell 0
Total 5
strong_buy
Broker recommendations should not be taken as investment advice, and are provided by the authorised brokers listed on this page.

Reach Dividends

  Latest Previous
  Final Interim
Ex-Div 12-May-22 12-Aug-21
Paid 10-Jun-22 24-Sep-21
Amount 4.46p 2.75p

Trades for 01-Jul-2022

Time Volume / Share Price
16:35 25,000 @ 101.40p
16:35 167,309 @ 101.40p
16:29 2,000 @ 100.76p
16:29 237 @ 100.90p
16:29 786 @ 100.90p

Reach Key Personnel

Chair Nick Prettejohn
CFO Simon Fuller
CEO Jim Mullen

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