The production of physical newspapers and magazines is slowly declining, so it's little wonder distributor Connect (CNCT) is focusing on parcels. Its news and media division has a 55 per cent share of the UK market, and is still the company's largest division by revenue, but that revenue declined from £1.5bn to £1.47bn this term. Chief executive Mark Cashmore says an additional £10m of cost savings - on top of the £25m in the past five years - will mainly come from merging delivery routes as newspaper volumes fall.
Its Pass My Parcel business did endure increased losses of £4m as the business continued to invest. While costs will increase in the near term, this is with the aim of driving growth in the number of parcels delivered from 0.5m in the year to August 2016 to 3m in FY2017 and 10m within three years. It already boasts Amazon (US:AMZ) and online clothing retailer Asos (ASC) as customers and is launching an online portal to serve small business clients through its network of parcel shops. Mr Cashmore said its Smiths News brand, PMP and recent acquisition Tuffnells - which specialises in irregularly shaped parcels - would increasingly share resources to help it secure major delivery contracts, including click-and-collect services.
Analysts at JPMorgan Cazenove marginally reduced pre-tax profit expectations to £60.5m for the year to August 2017, leading to EPS of 19.8p (from £60.7m and 19.8p in FY2016).
| CONNECT (CNCT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 144p | MARKET VALUE: | £356m | |
| TOUCH: | 144-145p | 12-MONTH HIGH: | 175p | LOW: 130p |
| DIVIDEND YIELD: | 6.6% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 5.3p* | NET DEBT: | £142m | |
| Year to 31 Aug | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.80 | 36.6 | 15.2 | 8.6 |
| 2013 | 1.81 | 38.9 | 15.7 | 9.3 |
| 2014 | 1.81 | 43.1 | 16.8 | 8.8 |
| 2015 | 1.88 | 29.0 | 9.3 | 9.2 |
| 2016 | 1.91 | 41.9 | 13.7 | 9.5 |
| % change | +2 | +44 | +47 | +3 |
Ex-div: 12 Jan Payment: 10 Feb *Includes intangible assets of £165m, or 67p a share | ||||
