London: British media group Daily Mail & General Trust said it was confident of at least meeting market expectations for full-year profit thanks to cost cuts, and said it saw signs of recovery in consumer media.
Daily Mail -- which has business-to-business publications, conferences and radio operations as well as newspapers -- said trading conditions in consumer media were difficult but advertising revenue at regional papers continued to stabilise.
“We are confident that we will at least meet market expectations for adjusted profits for the full year due to decisive actions taken on costs, with 150 million pounds ($238 million) of savings delivered,” it said on Tuesday.
Daily Mail said analysts were expecting profit before tax of 182 million pounds and earnings per share of 35.7 pence, excluding amortisation and impairment of intangible assets and exceptional items, according to its own surveys.
Shares in Daily Mail, which have more than doubled in value since a trough in March, rose 1.7% to 447.8 pence by 0722 GMT, the top gainer in the European media index.
The shares now trade at about 12 times 2010 earnings, closer to multiples of professional publishers than consumer media.
Numis analysts said in a note: “We continue to believe the market undervalues the company’s B2B assets and we view the B2C businesses as well-invested and best in class.” The brokerage raised its target price to 485 pence from 463 pence.
In the 11 months to end-August, Daily Mail’s sales fell 9 percent. Underlying business-to-business revenue fell 7 percent and underlying consumer media revenue fell 13%.
National newspaper advertising revenue fell 16% in the 11-month period and trading remained volatile, Daily Mail said in a statement. Regional advertising revenue fell 31% but the trend was improving, especially in property ads.
Signs of Recovery
Chief executive Martin Morgan told reporters on a conference call: “We do see the signs of a beginning of a recovery on the consumer side.” He said the company’s consumer business was more geared than B2B for an upturn going into 2010.
Morgan said the vast majority of cost cuts were over, after the company saved 150 million pounds this year.
Some consumer publishers have cautiously begun to estimate the worst is over, although advertising is still in decline. Lagardere, the world’s biggest consumer magazine publisher, said last month trends were improving.
But Future Plc -- a publisher of special-interest magazines and Websites for gaming, film and music enthusiasts -- guided on Tuesday towards the low end of market expectations, due to a continuing weak US ad market.
Daily Mail said most of its B2B operations -- which bring in more than half its revenue -- should improve next year. Exhibitions would likely take longer to recover as better visitor numbers slowly translated into more exhibitors.
Its majority-owned financial publisher and conference organiser Euromoney last week said it expected full-year profit to beat market forecasts thanks to tight cost control, and said September trading had held up well.
Daily Mail is due to publish full-year results on 26 November.