By Paul Sandle
LONDON (Reuters) - British newspaper publisher Reach (L:RCH) said it had seen a strong recovery in digital advertising and improvements in demand for its print titles from COVID-19 lows after it beat market expectations for first-half profit.
Jim Mullen, chief executive of the owner of the Daily Mirror, Daily Express and a host of regional titles, said Reach was performing materially ahead of expectations, although it was mindful of the impact of a potential second wave of the virus on the economy.
"We are encouraged by the performance of the business," he said in an interview on Monday. "We have seen a strong recovery in digital advertising and that returned to growth in Q3."
He said there had also been a "very steady improvement" in circulation as lockdown restrictions were eased, with circulation across all of its titles standing at just under 94% of pre-COVID levels.
Shares in the group jumped as much as 20% as analysts at Numis said both adjusted operating and pretax profit for the first half soundly beat their expectations.
The tone was much more positive than in July when Reach said it would cut about 550 jobs, or 12% of its workforce, after the pandemic hit circulation and advertising revenue.
The company has suspended its cash dividend, but is proposing a bonus issue to investors with a value of 2.63p per share thanks to its better than expected performance.
Mullen said 3.5 million online readers of Reach content had now registered, far exceeding the company's target of 2 million by the end of the year and helping drive demand from advertisers who can use the data to target consumers more effectively.
Digital revenue was up 12.9% year-on-year in the third quarter, the company said, while print declined by 19.9%, an improvement on the 29.5% seen in the second quarter.
For its first half to June 28, the company reported adjusted operating profit of 54.9 million pounds ($70.55 million), against 71.3 million pounds a year earlier, on revenue of 290.8 million pounds, down from 352.6 million pounds.
($1 = 0.7793 pounds)
($1 = 0.7782 pounds)