The Daily Mail & General Trust, the parent company of the Daily Mail has released a profit warning to investors after stating its profits fell by 29% due to a double-digit drop in print advertising at its newspaper operation whilst online revenue grew.
The owning company of the Daily Mail and Mail Online said that its overall financial results were “broadly in line with expectations”. The business did however warn investors and analysts that the performance of DMG Media, the unit which manages the Daily Mail, Mail Online and freesheet Metro will report earnings below full-year targets.
Print ad revenues across all of its newspapers fell by 13% during the six months ending March 2016 and what appears more worrying for investors is that the decline became worse in the first quarter of this year with a further 15% drop. Just The Daily Mail and Mail on Sunday saw their print revenues slump by 16% in the final six months.
Total revenues at both the Daily Mail and Mail on Sunday dropped by 7% during the six months ending March from £260m to £242m.
Digital advertising did however grow strongly in the six months, up 23% on an underlying basis which boosted total revenues at the Mail Online to £44m, partly offsetting an overall decline in ad revenue.
As a result the newspaper group advised investors that it was likely to miss its originally forecast operating margin for DMG Media of 13% for this year instead now expecting a drop to 10%.
Chief executive Martin Morgan said:
“DMGT’s performance in the first half was broadly in line with our expectations, other than the further deterioration in the UK print advertising market which impacted dmg media’s results.”
“The reduced print advertising revenues had an adverse impact on DMG Media’s operating profits.”
After 27 years of working at the business Morgan is leaving with Paul Zwillenberg a senior executive of Boston Consulting Group taking over.