Daily Mail suspends full-year guidance as Covid-19 starts to hit home
The owner of the Daily Mail and i newspapers has warned on its full-year performance, after the coronavirus outbreak started to dampen demand.
Daily Mail and General Trust, which also owns business-to-business titles along with an events and exhibitions division, said trading in the first five months of the financial year had been in line with expectations, with the outbreak having only a limited impact on the group’s performance to date.
Overall, underlying revenues in the five months to 29 February were ahead 3%. Within that, the business-to-business unit saw revenues increase 4%, while consumer media reported a 1% improvement after a 9% jump in advertising revenue was offset by a 5% fall in circulation.
But DMGT, which acquired the i newspaper in November, warned trading was now starting to be affected by the coronavirus outbreak.
“We have started to see the effects, notably on our events and exhibitions and consumer media businesses, and the financial performance in the 2020 full year is now likely to be lower than existing guidance,” it told investors.
“We consider it prudent to suspend the guidance at this stage, and will provide an update at the half-year results on 28 May.”
DMGT had previously said it expected group revenues to be broadly stable on an underlying basis.
Paul Zwillenberg, chief executive, said: “The impact of Covid-19 is likely to affect our business adversely.
“I am confident, however, that the group’s diversified portfolio and strong financial position, with more than £700m of cash and bank facilities available, will enable us to withstand a sustained period of global economic uncertainty and continue to invest through the cycle.”
Harry Read, analyst at Liberum, who has a target price of 870p on the stock and a ‘hold’ recommendation, said: “The impact of Covid-19 is likely to adversely affect the performance of the business for the remaining seven months of the financial year.
“The group has seen effects notably on the events and exhibitions (8% of group revenue) and consumer media business, and the financial performance in the 2020 full year is now likely to be lower than the existing guidance.”
As at 1030 GMT shares in DMGT were off 1% at 654p.