British media company Daily Mail & General Trust Plc (DMGT.L) Wednesday reported a 15% decline in revenues for the first quarter, impacted negatively by lower advertising revenues. Meanwhile, the company said demand for advertising shows possible signs of recovery, although, it expressed limited visibility on future advertising performance.
Chief Executive Martin Morgan said, "Trading in the first quarter has been ahead of our expectations and the new calendar year has started well, but we remain cautious about the outlook for the rest of the year, particularly in the UK."
In an interim management statement, the company reported first quarter revenues of GBP 482 million, down from GBP 568 million in the same quarter last year. On an underlying basis, revenues were down 8%. Underlying revenues are revenues on a like for like basis, adjusted for acquisitions, disposals and closures made in the current and prior year and at constant exchange rates.
Overall operating margins for the quarter, excluding amortisation and impairment of intangible assets and exceptional items, have improved, resulting in a higher adjusted operating profit. Performance in the quarter is indicative of underlying growth in revenues from Risk Management Solutions, or RMS, segment and DMG Information segment, which were offset by lower revenues from World Media and Euromoney.
Revenues from business to business operating segments dropped 20% year-over-year to GBP 186 million, but on an underlying-basis, revenues declined only 7%.
The U.S.- based RMS segment's revenues rose 2% year-over-year to GBP 35 million, and on an underlying-basis, revenues increased 7%, helped by continued solid growth from core modelling business due to the improving conditions in the insurance and capital markets. Looking forward, the company said there are encouraging signs that the sales pipeline is strengthening for the rest of the year.
Information segment generated revenues of GBP 49 million, down 6% from last year. While, on an underlying basis, revenues grew 6%, and adjusted operating profits were well ahead of last year. The property information companies delivered an underlying increase of 12%, driven by improvement in residential transaction volumes in the UK.
World Media segment's revenues plunged 47% year-over-year to GBP 31 million, hurt by the divestments of businesses last year as the company planned to focus on the portfolio on the B2B sector, and the absence of a biennial event. On an underlying basis, revenues dropped 11%.
Euromoney Institutional Investor Plc (ERM.L), the company's London-based financial information provider, in January said its first quarter trading continued in line with its expectations. Revenues for the quarter fell 16% to GBP 71 million, an underlying decrease of 17%. Revenues from subscription-based products declined, and revenues from events and training also continued to drop and in line with the second quarter after tight cost controls were implemented by customers since January last year.
Consumer media division's revenues declined 12% year-over year to GBP 297 million, on an underlying-basis, revenues fell 9%. The segment revenues also included Radio Australia up until December 16 after which date it is being accounted for as an associate.
At A&N Media division, headcount fell 4% to 334 for the quarter, due to further reductions at Harmsworth Printing, Northcliffe Media and in Associated Newspapers through the closure of London Lite. But the division is expected to be benefited from lower newsprint prices this year.
Associated Newspapers' total revenues declined 12% to GBP 208 million, on an underlying basis, revenues fell 6%, after excluding the Evening Standard and London Lite that were closed on November 13, 2009. Underlying circulation revenues were down 6% from last year. Both Daily Mail and The Mail on Sunday achieved an increased market share in the quarter.
Total underlying advertising revenues decreased 11%, including a 8% drop from Associated's newspaper revenues. Display advertising was down 8%, and classified down 10%, while digital advertising up 4%. Retail, the largest display category, grew by 7% for the quarter and motors advertising was flat. All other major categories were down year on year. Revenues of AN Digital from its core operations in jobs, property and motors fell 13%, due mainly to the depressed recruitment market.
For the quarter, costs decreased 7% on a like for like basis, despite significant investment in promotional spend on the national newspapers.
The company indicated improvement in trading in January, with advertising revenue up year on year in the newspapers and their online "companion" sites, even though, it expressed limited visibility on future advertising performance. At AN Digital too there are clear signs that things are improving, particularly in jobs and property.
Northcliffe Media's total revenues for the quarter were down by 15% to GBP 73 million, including a 14% decline in UK revenues, and 23% drop in International.
In the UK, comparisons with the previous year are slightly distorted by the inclusion of a 53rd week ending October 4 in the prior financial year. The company estimated that underlying revenues for the quarter were 11% below last year.
UK advertising revenues were 13% lower than the same period last year, compared with a year-on-year decline of 18% in the previous quarter. Trading conditions were challenging particularly for recruitment advertising which was down 33%. In addition, retail advertising declined by 7%, Property was down 5% and Motors fell by 8%. January has seen a continuing improvement in advertising trends.
UK digital revenues for the quarter were 11% higher than the same period last year, supported by good performances from Property, Motors and Retail. UK circulation revenues for the quarter were 8% below last year. Copy sales of daily and weekly paid for titles declined by 8% and 5% respectively in the July to December 2009.
As at December 31, net debt fell to GBP 1.03 billion from GBP 1.05 billion as at October 4, 2009.
DMGT is currently trading at 433.90 pence per share, down 8.70 pence or 1.96%, on the London Stock Exchange.
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