One of the UK’s biggest newspaper publishers has warned that newsprint inflation and reduced advertising demand are hitting the industry as profits have fallen by almost a third.
Operating profits for Reach, which owns the Daily Mirror, Daily Express and a host of regional titles, fell 31.5% in the first half of 2022 from the same period last year, from 68, £9m to £47.5m.
Revenue was also down slightly, falling 1.6% from £302.3m to £297.4m and with printing revenue down 3.9%.
Bosses said rising energy prices were fueling unprecedented newsprint costs and said the outlook for the second half of the year was similarly bleak.
They also said the decline in advertising revenue, of 9.9%, was partly due to the war in Ukraine which exacerbated a slowdown in demand for branded ads.
Shares fell more than 27% on Tuesday morning following the company’s results.
But Reach said it continues to invest in its digital services which are the future of the business, with digital revenue growing 5.2% in the first half.
Reach CEO Jim Mullen said, “While the macro environment naturally presents challenges, we are committed to investing in the data and digital capabilities that are shaping the future of our business.
“We have moved quickly to address the headwinds the business is facing and expect the incremental cost savings and hedge price increases to mitigate the impact of newsprint inflation and the reduced demand from advertisers that affects the entire industry.”
The publisher said the high cost of printing newspapers was unprecedented, rising about 65% higher on a like-for-like volume basis.
It comes as Reach was threatened with a strike earlier in July after staff and union members rejected a proposed 3% pay rise citing soaring living costs.
The National Union of Journalists has informed Reach that it will for the first time vote its members across the company to vote on strike.