Shares in the owner of the Daily Mirror rose more than a quarter after the publisher said it expects to beat annual profit expectations, after a strong end to the year and the benefit of deep cost-cutting in recent years.
Reach, which owns national papers including the Mirror and Express and scores of local titles including the Manchester Evening News and the Liverpool Echo, said the profit upgrade was because of a strong final quarter last year.
The company, which two years ago slashed almost 800 roles in the biggest cutting of jobs in the newspaper industry in decades, said it expects to beat analysts’ forecasts of £97.4m in adjusted operating profit for 2024.
Shares in Reach soared 26% on Monday, and the company’s share price is up 41% over the past 12 months.
After the large-scale cuts, Jim Mullen, the chief executive of Reach, had promised no more job losses but made more cuts late last year. Mullen hopes to implement “a single-team approach” across several titles, with integrated seven-day print and digital operations.
Mullen faced a heated online reaction from staff to the job cuts in 2023. One staff member posted that the “redundancies left my mental health in pieces”.
Reach said it ended last year with an increased headcount, having made at least 60 editorial hires.
A string of high-profile editorial executives have left during the rounds of restructuring, including the Daily Mirror editor, Alison Phillips, and the group editor-in-chief, Lloyd Embley.
The editors of the Daily and Sunday Express, Gary Jones and David Wooding respectively, have also left the company.
The investment bank Panmure Liberum said Reach, which reported a profit of £96.5m in 2023, probably benefited from strong digital revenues in the run-up to Christmas and the impact of its cost-cutting strategy.
“Given the health of the digital advertising market particularly around peak period centred on Black Friday, we expect the digital business to have outperformed,” said Johnathan Barrett, a research analyst at Panmure Liberum.
“We also expect that, given previous indications on how well the cost programme has been performing, that the company has also exceeded its target, amplifying revenue outperformance.”
Panmure Liberum has raised its forecast for Reach’s profit before tax to £98.1m for 2024, and earnings before interest and tax to £101.8m, although it expects annual profits to decline this year.
Reach also said that it had had to pay £5m in additional funding to one of its pension schemes because of a “historical error”.
However, the company said it had reviewed its other pension schemes for the same error and it had “not identified any material items”.
