Reach (RCH) H1 2024 earnings summary

Executive summary

• Delivered solid operational and strategic progress in H1 2024, with resilience in both print and digital segments and strong cost management driving results.

• Digital transformation advanced, with digital trading rebounding in Q2, returning digital business to growth and increasing data-driven revenues by 9%, now 45% of digital revenue; digital yield up over 30%.

• Print remains a significant revenue and profit contributor, with circulation and advertising outperforming structural volume declines.

• Cost management actions and early interventions from 2023 led to a 9% reduction in operating costs, improved operating margin at 16.8%, and strong cash generation.

• Interim dividend maintained at 2.88p per share, reflecting continued shareholder returns.

Financial highlights

• Revenue for H1 2024 was £265m (down 5.2% year-over-year); digital revenue £60m (down 1.3%), print revenue £204m (down 6.1%).

• Adjusted operating profit rose to £44.5m (up 23.1%); operating margin improved to 16.8% from 12.9%.

• Adjusted EPS increased to 10.1p (H1 2023: 8.7p); cash conversion at 130% with adjusted operating cash flow of £58m.

• Operating costs reduced by 9% (£23m) due to cost-saving initiatives.

• Net debt at period end: £12.3m, reflecting payments for restructuring, legal settlements, and pension contributions.

Outlook and guidance

• On track to deliver full-year market expectations, with consensus adjusted operating profit at £97.8m.

• Operating cost savings expected to moderate in H2 but remain ahead of 5%-6% target; profit phasing expected to be more balanced between H1 and H2.

• Capital expenditure and pension contributions to remain in line with 2023 (£15m capex, £60m pension).

• Cautious on digital revenue growth rates post-Euros and election, but comfortable with current run rates.