Reach has announced around 200 redundancies, as part of plans to cut costs by £30m this year.
The media group behind The Mirror, Daily Express, Daily Record and Insider published a fourth quarter trading update, detailing its response to “challenging trading conditions“.
Unions have been consulted on job losses, with affected staff being notified throughout the day. The group is also scaling back hiring, withdrawing several current vacancies; although not freezing recruitment altogether.
While circulation revenue grew by 1.8% in the final quarter, on the back of cover price increases, it was down 1.7% for the year, while digital revenue and print advertising declined by 5.9% and 20.2% respectively during the last three months of 2022.
From July to August digital revenue grew 5.9% and print advertising declined 17%.
Overall falls in circulation were largely due to a significantly lower than anticipated benefit from programmatic yields and campaign spend around Black Friday and Christmas.
“More broadly, we have also seen the continued impact of macroeconomic and consumer uncertainty, reflected in slowing market demand for advertising,“ the statement noted.
Lower than forecast group revenue in the fourth quarter and a less profitable revenue mix of stronger circulation - but lower advertising - is expected to impact profit. The board now expects operating profit for the full year 2022 to be below the current market consensus - revenue at £602.5m and operating profit of £112.8m - by mid-single digit percentages.
During 2023, Reach is now targeting savings of at least £30m to help mitigate the impact of macro pressures and support investment in transitioning to a more digitally-led and profitable group.
“These will be generated throughout the business and includes simplification of central support functions, supply chain efficiencies in print and distribution, and accelerated removal of editorial duplication,“ the statement explained.
Q4 YOY 1 |
FY 2022 1 |
|
Digital revenue |
(5.9%) |
1.0% |
Print revenue |
(3.6%) |
(3.5%) |
- circulation revenue |
1.8% |
(1.7%) |
- advertising revenue |
(20.2%) |
(15.9%) |
Group revenue |
(4.2%) |
(2.3%) |
Chief executive Jim Mullen stated: “While the macroeconomic environment remains challenging for the whole sector, we are continuing to deliver on our strategic priorities.
“We expect current market headwinds will continue during 2023 and have therefore taken decisive action, putting in place a further cost reduction plan.
“This will ensure we retain our strong foundations and are able to continue investing in our digital growth priorities, which position us to benefit strongly when the economic environment improves.”
In a message to staff, Mullen explained that the business has been impacted by a significant increase in input costs.
“The unit price of newsprint, for example, has increased by around 60% in the last 12 months.
“This increase in a major input cost for us has aligned with a consumer downturn due to inflation and cost pressures,“ he continued, adding: “Our business is being subjected to stresses at both ends of our finances - that is revenues and costs negatively impacted, and at a rate of change our company has quite simply never seen before.“
This comes on top of the significant cash outflow relating to historical legal issues and pension deficit obligations - between them around £70m per year - which “puts us in an extremely challenging position“.
A new chief financial officer, Darren Fisher, will join the business on 1 February, with full year results expected on 7 March.
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