Daily Mirror publisher warns soaring printing costs will hit its revenue

The publisher of the Mirror and Express newspapers saw its shares plunge as it warned that rising printing costs are expected to impact profits this year.

each, which also owns a range of regional headlines including the Manchester Evening News, revealed that inflationary pressures had recently “intensified”.

He said rising costs were being felt most in newspaper print production, with soaring energy prices adding to supply chain challenges.

The impact of inflation, which began to affect activity towards the end of 2021, has now intensified, particularly in print productionTo reach

Shares lost almost a quarter of their value at one point as the group warned this should lead to a ‘moderate’ decline in operating profits in 2022 as ongoing cost-cutting actions cannot offset only partially the impact.

The warning sparked numbers showing its first like-for-like revenue growth in 14 years.

Reach said: “The impact of inflation, which began to affect the business towards the end of 2021, has now intensified, particularly in print production.

“This was mainly reflected in the cost of newsprint (printed paper), which, previously impacted by rising distribution costs and supply issues, now also reflects the significant increase in the price of energy.

“As a result, the gross impact of inflation in 2022 is expected to be higher than in recent years.”

Its annual results showed the group had already seen a “significant” increase in newsprint costs last year, up 16% to £52.9million.

Investors in the group headed for the exit, although Reach revealed revenue rose 2.6% to £615.8m last year, marking the first revenue growth since 2007 .

It recorded an increase in underlying pre-tax profits to £143.5m in 2021 from £131.3m in 2020.

The publisher refocused its online business, with digital sales growth of 25.4% more than offsetting a 4.7% drop in print revenue.

But online revenue growth has slowed since year-end, up 10.3% in the first eight weeks of 2022, while print saw a 4.2% drop, leaving the group’s overall turnover down by 0.7%.

“We expect digital revenue growth to again offset the print decline, with total revenue flat for the full year of 2022,” Reach added.

Analysts at Peel Hunt said they expected inflation to hit pre-tax profits at £134.3million in 2022.

“We believe the inflationary impact may well persist, thus affecting 2023 as well, although further cost-cutting measures will surely be implemented,” they said.

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