Reach on track to beat FY profit target after solid start to 2021

Reach has strengthened its full-year guidance following a "positive" start to the year.

Updating on trading in the first four months of the year, the owner of the Mirror and Daily Express newspapers, along with a number of regional titles, said both digital and print revenue were performing "slightly ahead of our expectations".

Digital revenue grew 35.0%, while total print revenue was down 10.4% and circulation eased 7.9%. Group revenue was off 3.1%.

On a two-year comparison basis, to strip out the effects of the pandemic, digital revenue increased 41.3%, while print revenue was down 24.3%.

There was also continued growth in registrations, which now stand at 6.2m compared to 5.8m at the beginning of March. Reach is targeting 10m registrations by the end of 2022.

Looking to the full year, Reach said: "Although headline revenue growth is currently flattered by a soft prior year comparative, underlying momentum has been encouraging.

"The business is continuing to benefit from the efficiencies driven by last year’s transformation programme, which together with a growing mix of digital revenues means that operating profits for the year are now expected to be slightly ahead of market expectations."

Chief executive Jim Mullen said: "We have had a positive start to the year. With digital now accounting for more of our advertising revenues than print and growing strongly, we are well placed to make further progress during 2021."

Malcolm Morgan, analyst at Peel Hunt, said: "The company expects operating profit to be slightly ahead of consensus (£137.1m versus Peel Hunt’s estimate of £138.7m). We believe there is room to increase this modestly, 1% to 2% perhaps. Overall we consider it a positive start to the year, with momentum in digital likely to build in the second half, and we increase our target price from 200p to 220p and reiterate our ‘hold’."

As at 1130 GMT, shares in Reach were unchanged at 220.0p.