What's new:
■ Delayed release of new risk-management product
■ Digital gains offsetting print decline
■ Daily Mail achieved record market share in February
Shares in Daily Mail & General Trust (DMGT) slumped 7 per cent following a trading update for the five months ending February. Total sales at the publishing, information and events specialist dipped 1 per cent as it delayed the release of a new risk-management product, and its events and circulation revenues tumbled 24 and 4 per cent respectively.
But the headline figures don't tell the whole story. Adjust for acquisitions, disposals, exchange rates and non-annual events, and group sales rose 6 per cent. That was driven by 10 per cent underlying growth in its business-to-business segment - the umbrella for its risk-management solutions, information and events operations, and majority stake in Euromoney Institutional Investor (ERM).
DMGT's consumer division, which includes the eponymous newspaper, made more modest gains, all relating to online adverts. Circulation revenues fell 2 per cent, with falling volumes somewhat offset by an increase in the Daily Mail's cover price in February 2013. Print advertising sales also fell by £2m to £84m, although this shortfall was more than made up by an £8m increase in online advertising sales, to £23m. MailOnline had 11.3m browsers a day in February, up by 47 per cent year on year.
Westhouse Research says...
Neutral. Within business-to-business, risk-analysis company RMS continues to generate strong underlying growth of 7 per cent year on year, and DMGT's information and events divisions also performed well. But its underlying newspaper advertising revenue declined by 3 per cent, and Euromoney - in which it has a 68 per cent stake - just released a muted trading update, prompting us to lower our pre-tax profit forecast by 1.5 per cent. Our price target for DMGT stands at 960p.
Credit Suisse says...
Buy. DMGT has performed ahead of our expectations, with underlying revenue growth outpacing our 4.5 per cent estimate for the first half. However, the full launch of RMS(one) has been deferred to late 2014, and underlying advertising has dipped 7 per cent in the past month, partly because of a later Easter. Both developments are disappointing, but we gain confidence from management's reiterated profit guidance and optimism regarding client uptake. We maintain our price target of 1,150p.
