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Bad news for Daily Mail publisher as print sales fall

Shares in Daily Mail and General Trust tumbled after its interim results failed to impress
May 26, 2016

Investors sent shares in Daily Mail and General Trust (DMGT) down 12 per cent after the Metro and Mail on Sunday publisher revealed a mixed set of figures for the six months to 31 March. Flagging demand for print newspapers outweighed higher underlying sales in the risk management software, information and events divisions, driving adjusted operating profits down 12 per cent to £138m.

IC TIP: Hold at 681p

DMGT is working to offset print weakness by reshaping its portfolio and investing in faster-growing markets such as events, software and digital content. Underlying circulation and print advertising revenues both declined; together with higher digital costs, that meant underlying operating profits shrunk by 29 per cent in the media segment. The bright spots were the online news platforms: MailOnline's average monthly users grew by 8 per cent to 236m, while Elite Daily more than doubled its sales, boosting digital revenues by more than a fifth. However, DMGT's challenges were compounded by declines at financial information business Euromoney as increased financial regulation and weak energy and commodity markets weighed on demand for events and information.

The risk management software business cashed in on new products and improved hurricane and windstorm models. Meanwhile, brisk demand for property, education and energy insights underpinned growth in the information segment. And strong showings from ADIPEC, Big 5 Dubai and other major industry events drove underlying event sales up 5 per cent.

DMGT spent £20m on acquisitions, including five events in Africa that feed into its strategy of replicating events in new territories and tapping into emerging markets. It also netted £112m from the disposal of online discount business Wowcher and the sale of its stake in regional publisher Local World to Trinity Mirror (TNI).

Continued print weakness led management to reduce its full-year guidance for the media segment's operating margin from 13 per cent to 10 per cent. Broker Numis trimmed its forecasts and now expects pre-tax profits of £250m in the year to 30 September, giving EPS of 53.8p (FY2015: £281m and 59.7p).

DAILY MAIL AND GENERAL TRUST (DMGT)
ORD PRICE:681pMARKET VALUE:£2.4bn
TOUCH:680-681p12-MONTH HIGH:990pLOW: 602p
DIVIDEND YIELD:3.2%PE RATIO:10
NET ASSET VALUE:138p*NET DEBT:115%

Half-year to 31 Mar Turnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201591912726.56.5
201695019551.36.7
% change+3+54+94+3

Ex-div:09 Jun

Payment:02 Jul

*Includes intangible assets of £1.38bn, or 408p a share