Shares in the owner of the Daily Mail and Mail Online have slumped by more than 20% after it reported a sharp drop in annual profits and warned of a tough year ahead.
Daily Mail & General Trust (DMGT), which also owns the Mail on Sunday and Metro newspapers and is the largest shareholder in business-to-business publisher Euromoney, said its business would be “adversely affected by recent disposals and challenging conditions in some of our sectors”.
The shares hit a five-year low of 500p in early trading on Thursday, down 28%, and later traded 23% lower.
DMGT is also the largest shareholder in ZPG, the company behind the property website Zoopla and the price comparison site uSwitch. It has reduced its stake in Euromoney to 49% from 67%.
DMGT posted a 13% fall in adjusted profits before tax to £226m for the year to the end of September. Revenues were also down 13%,to £1.66bn.
The company made a statutory loss before tax of £112m, hit by impairment charges of £206m against several of its investments including data firms Genscape, Xceligent and SiteCompli.
Chief executive Paul Zwillenberg highlighted Mail Online’s move into profit in the final quarter and cost savings in the newspaper businesses, including the closure of the Didcot printing site.
Revenues for the Daily Mail, Mail on Sunday and Mail Online combined were £574m, boosted by increases in print cover prices. The website contributed £119m.
The group expects further growth in digital advertising revenues, helping offset declines in newspaper circulation and print advertising, but warned that “advertising market conditions [were] likely to remain volatile”. The underlying rate of decline in revenues at its media business is expected to be in the mid-single digits.
Investec analyst Steve Liechti said the outlook for the media business was worse than expected.
Analysts at Liberum said: “What is clear is that DMGT faces another year of ‘transformation’ but it is not entirely clear when we will get the acceleration of top-line growth.
“The question we would have is, if Mail Online is becoming a greater part of the group (17% of revenues in 2017) and is moving into profits and is faster growth, why is the like-for-like revenues trend going backwards as well as the margin.”
DMGT hinted at further asset sales, saying: “Where DMGT is not the best owner, further divestments will be made.”