Reach (RCH) H2 2024 earnings summary

Executive summary

• Delivered strong financial performance in 2024, exceeding market expectations with digital revenue growth and operational efficiency despite macroeconomic challenges.

• Digital business returned to growth, with data-driven revenues now 45% of digital revenue and a 19% yield increase; Customer Value Strategy drove a 7% increase in data-driven digital revenues.

• Print remains structurally challenged but outperformed volume declines in circulation and advertising.

• Operational efficiency and cost management initiatives led to a 19% operating margin and a 6.5% reduction in operating costs.

• U.S. expansion and content hub initiatives contributed to audience and engagement growth.

Financial highlights

• Operating profit reached £102 million, up 6% year-over-year, with adjusted operating margin at 19%.

• Digital revenue grew 2.3% to £130 million; print revenue declined 6% (£32 million).

• Adjusted operating cash flow improved by £15 million to £107 million; cash conversion at 105%.

• Net debt at period end was £14 million, after £59 million in pension contributions and £23 million in dividends.

• Total dividend maintained at £0.0734 per share.

Outlook and guidance

• Expect continued digital revenue growth in 2025, with macro uncertainty persisting; consensus adjusted operating profit for FY25 is £99.3 million.

• Labor costs anticipated to rise by 2% due to national insurance changes; further 4-5% reduction in operating costs targeted.

• Capital expenditure and pension contributions to remain consistent with 2024 levels, with capex in the mid-teens and pension contributions similar to FY24 plus £5 million.

• Prudent approach to growth in 2025, with no major one-off events like the Euros or general election expected.

• Working capital inflow expected to unwind in H1 2025.