The Daily Mail's publisher's share price tumbled as much as 25 per cent today as it reported a steep decline in full-year profits.
In the year to the end of September, Daily Mail & General Trust (DMGT) reported a 13 per cent drop in profit before tax to £226m. Shares in the company were down 23.72 per cent at 535.5p at the time of writing.
Revenue stood at £1.7bn, up one per cent on an underlying basis.
The company booked impairment charges of £206m against some of its investments, including Genscape, Xceligent and SiteCompli.
Why it's interesting
While DMGT's popular Mail Online moved into profitability, analysts at Liberum said they were concerned about, among other things, DMGT's guidance for 2018.
The company said its short-term earnings would be adversely affected by recent disposals and challenging conditions in some sectors.
It said the underlying rate of decline in its media business was expected to be in the mid-single digits in the next financial year, with the operating margin dropping to about 10 per cent from 11 per cent in the previous year.
"[DMGT's guidance] suggests the group will have flattish underlying revenue growth vs our expectation pre-today of low single digit growth, with the disappointment being at the consumer media side where we had expected revenues to be flat. There may also be some caution on the B2B growth estimates given the lowering of guidance over the years," Liberum analysts said in a note.
"The question we would have is, if Mail Online is becoming a greater part of the group (17 per cent of revenues in 2017) and is moving into profits and is faster growth, why is the like for like revenues trend going backwards as well as the margin."
What DMGT said
Chief executive Paul Zwillenberg said he was encouraged by DMGT's "resilient underlying performance" in the year.
As we move into FY 2018, we proceed with confidence towards my vision for DMGT's future. The board is confident that the new strategy and strong balance sheet will, over the medium term, generate consistent earnings growth that will underpin DMGT's long-standing commitment to deliver sustainable annual real dividend growth.