The publisher of the Mirror and Express newspapers saw shares plunge as it warned that higher printing costs will hit profits this year.
each, which also owns a host of regional titles including the Manchester Evening News, revealed that inflationary pressures had recently “intensified”.
It said added costs are believed to be the most in the production of newspapers, with rising energy prices adding to supply chain challenges.
The impact from inflation, which will begin to affect business activities by the end of 2021, has now increased sharply, especially in print manufacturing.Reach
Shares have lost nearly a quarter of their value at one stage as the group warned it is expected to cause a “modest” drop in operating profit in 2022, with cost-saving actions linked to it. Continuity can only partially offset the impact.
The warning shed light on numbers showing similar revenue growth for the first time in 14 years.
“The impact from inflation, which began to weigh on business in late 2021, has now intensified, particularly in print production,” said Reach.
“This is mainly reflected in the cost of newsprint (paper for printed products), which was previously affected by rising distribution costs and supply challenges, now also reflects a significant increase in costs. of energy prices.
“Therefore, the compounding impact of inflation in 2022 is expected to be higher than in recent years.”
Year-to-date results show the group saw a “significant” increase in newsprint costs last year, up 16% at £52.9m.
Investors in the group have already come to the exit, although Reach revealed a 2.6% increase in revenue to £615.8 million last year, marking its first revenue growth since 2007.
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It announced an increase in basic pre-tax profit to £143.5m in 2021, up from £131.3m in 2020.
Publishers have shifted their focus to online, with digital sales growing more than 25.4% versus a 4.7% decline in print revenue.
However, online revenue growth has slowed since the end of the year, growing 10.3% in the first eight weeks of 2022, while print newspapers fell 4.2%, leaving group-wide revenue 0.7% lower. .
Reach added: “We expect digital revenue growth to offset declines in print, with total revenue flat through 2022.
Analysts at Peel Hunt said they expect the impact inflation will cause pre-tax profits to drop to £134.3m by 2022.
“We feel the inflationary impact is likely to persist, so so is the impact through 2023, although further cost-saving measures are certainly to be taken,” they said.
https://www.independent.ie/entertainment/daily-mirror-publisher-warns-soaring-print-costs-to-hit-earnings-41397466.html Daily Mirror publisher warns rising printing costs will hurt earnings