The national and regional newspaper publisher filed sales down 17.5% at £290.8m in the six months to 28 June.
Adjusted operating profit was £54.9m (2019: £71.3m). Statutory pre-tax profits more than halved at £25.2m compared with the prior year's £58.2m.
Reach reported a “strong recovery” in digital advertising since the pandemic initially hit business in April, while circulation sales have also stabilised and shown signs of recovery in Q2 and Q3.
Overall print sales were down 20.1% at £241m. Within that, circulation revenues were down 11.5% while print advertising was down by nearly 32%.
Contract printing sales slumped by just over 40% at £11.8m.
Although Reach is currently performing materially ahead of market expectations for the full year, the PLC cautioned that its management team remained “fully aware that Covid-19 still represents a significant macro-economic challenge to the UK economy”, with the potential to negatively impact the business.
Over the summer the group announced a £20m restructuring programme aimed at cutting costs and improving margins, while delivering annualised savings of at least £35m.
The restructure of editorial, advertising and central operations has resulted in national and regional teams operating as one editorial operation, with teams working across print and digital products.
“Thankfully these changes were achieved with fewer compulsory redundancies than originally planned thanks to extensive redeployment and voluntary redundancies,” Reach stated.
However, the impact of the Covid-19 pandemic on Reach’s third-party work means attention has now turned to the group’s printing sites.
Reach Printing Services is the biggest contract newspaper printer in the UK, with six print sites at Watford, Luton, Birmingham, Oldham, Teesside and Cardonald near Glasgow.
“With ongoing uncertainty over third-party print contract renewals and future volumes we will now also review our print capacity requirements during Q4,” Reach stated.
Third-party customers have reduced volumes or suspended publications, it said.
The group acquired Northern & Shell’s UK publishing assets two-and-a-half years ago, which included the Westferry print site in Luton.
Reach also produces sports programmes, books and magazines for a variety of clubs including Liverpool FC, Manchester United and Chelsea. The impact of the pandemic on this area of the group’s business contributed to a 38.5% decrease in ‘other’ revenue.
The PLC's cash dividends remain suspended due to Covid-19, but in lieu of a divi Reach is planning a ‘bonus issue’ of 12,798,952 new shares to existing shareholders, with the equivalent value of a 2.63p interim dividend.
The bonus issue is subject to shareholder approval at a general meeting to be held next month.
Shares in the group jumped from 64.5p to 79.3p after the announcement.
