Daily Mail plummets after warning of ‘Year of Transition’
LONDON: Daily Mail & General Trust Plc slumped the most since 2001 after giving investors news they didn’t want to hear: 2018 will essentially be a lost year.
The publisher of the Daily Mail newspaper said fiscal 2018 would be a “year of transition”, warning of weakness across its businesses, a higher tax rate and a hit from asset sales.
The stock fell as much as 29 per cent yesterday, the most since the September 11 attacks, when the company’s trade publishing business suffered losses from cancelled New York events.
The plunge shows investors are losing patience with the company’s delays in delivering a turnaround, a little over a year after chief executive officer Paul Zwillenberg took over.
Panmure Gordon & Co berated the company for what it called “arguably the fifth transitional year in a row”, highlighting how one of Britain’s biggest media brands is struggling to reinvent itself from a tabloid publisher to a diversified global media group.
While the company, known as DMGT, didn’t put firm numbers on the outlook, analysts took down their ratings. Panmure Gordon’s Jonathan Helliwell forecast a more than 20 per cent slide in earnings per share in the coming year.
He called the guidance “notably weak” in a note to clients and said the warning of a transitional year “may be the understatement of the century”.
It also announced impairment charges of £206 million (RM1.14 billion) against several of its investments, including Genscape, SiteCompli and Xceligent.
“That points to the risk of what has been DMGT’s change into an almost-VC style structure,” said Liberum analyst Ian Whittaker, who downgraded the stock to “hold” from “buy”.
Zwillenberg opened up the business to dramatic changes, saying in December last year there were “no sacred cows” he wouldn’t consider selling. The company subsequently reduced its stake in trade publisher Euromoney to a minority holding.
He reiterated the message yesterday.
“It has become apparent we need to implement real change across the group, and at pace,” he said in a presentation to analysts. “It’s good that we started on this path last year, because the headwinds in many of our markets have intensified over the past 12 months.”
The company has been diversifying, focusing on expanding digital and business-to-business information and events management units. While the MailOnline web publishing business reported its first profit yesterday, Daily Mail is grappling with declining circulation and advertising in the print business.
The property information portfolio has been hit by declining residential transactions in the United Kingdom, while the sustained low oil price has affected sales bookings for Canadian energy-related events.
The stock was down 22 per cent to 548.50 pence at 12.55pm, here, giving the company a market value of £1.95 billion. The shares had fallen 9.7 per cent year-to-date before yesterday, driven by investor concern over weakness in its information and events businesses.
Full-year sales at the publisher rose one per cent to £1.66 billion, once adjusted for disposals including its reduced Euromoney stake. That narrowly missed an average estimate of £1.67 billion, based on a Bloomberg survey of 11 analysts. Bloomberg