LONDON (Reuters) - Stronger demand for advertising on news website MailOnline helped owner DMGT report a better-than-expected 19% rise in first-half profit on Thursday, lifting its shares to an eight-month high.
Underlying revenue grew 16% at MailOnline, one of the world’s leading English language newspaper websites, more than three times the rate recorded for the whole of the company’s previous financial year.
“It’s great to see MailOnline back to those sorts of levels of growth rates,” Chief Financial Officer Tim Collier said. “That’s driven by our ability to get traffic to come direct to our portal or our app, which is particularly encouraging.”
Facebook reduced the prominence of news websites on its platform last year, prompting daily unique browsers on MailOnline to fall 7% to 12.7 million.
DMGT, however, was already focusing on the more valuable customers who come directly to its site and app, which often feature show business and celebrity stories.
The rise in revenue from online services and its Metro free sheet more than made up for a 5% decline at its Daily Mail and Mail on Sunday print titles.
“We delivered a good performance in the first half with a combination of underlying revenue growth, cash OI (operating income) growth and profit growth,” Chief Executive Paul Zwillenberg said in an interview.
“This is on the back of a particularly strong performance in our consumer media and continued growth in our B2B (business to business) portfolio.”
Given the strong MailOnline performance in the first half, DMGT revised its consumer media revenue outlook to a low-single digit decline for the full year, rather than the mid-single digit decline it previously forecast.
Collier said he expected to meet analysts’ full-year forecasts for revenue of between 1.36 billion pounds and 1.41 billion and adjusted pretax profit of 130 to 137 million.
AJ Bell investment director Russ Mould said the market had been expecting a “pretty terrible” set of figures from DMGT given the Brexit uncertainty that continues to stalk the UK economy.
“Little wonder the market is responding positively as first-half numbers turn out to be somewhat better than feared, suggesting the strongest media brands can still attract advertising spend,” Mould said.
DMGT, which also has business-to-business and events divisions, reported pretax profit of 100 million pounds ($126 million), up an underlying 19%, on revenue of 724 million, up 1% on the same basis, for the six months to March 31. Analysts at Numis had expected profit to come in at 86 million pounds.
Shares in the group, which reiterated its full-year forecast, were up 8.7% at 734 pence by 1207 GMT. The company said it would increase its interim dividend 3% to 7.3p.
Analysts at Citi, who have a “sell” rating on DMGT, said the results were “decent”, with a “healthy beat on the bottom line”, but added that limited visibility on the outlook meant consensus expectations were unlikely to change.
Reporting by Paul Sandle; Editing by Deepa Babington and David Holmes