Shares in newspaper distributor Connect Group fell more than four and a half per cent this morning as the company reported an 18 per cent fall in pre-tax profits for the year ending 31 August.
According to the group’s preliminary results, profits fell from £28.4m in 2018 to £23.2m this year, with earnings per share down 15 per cent to 7.9p.
Continuing legacy issues with Tuffnells, a parcel freight distributor, offset a strong performance from Smith News.
In September Smith News network has won a new five-year agreement to distribute the Telegraph and Sunday Telegraph.
The contract is worth £100m a year in revenue and runs from October 2019 until September 2024.
The company announced that it would conduct a strategic review of Tuffnells in an attempt to speed up its recovery.
It also said that it would appoint an executive chair to the freight company to support it during the strategic review.
Chairman Gary Kennedy said: “The turnaround of Tuffnells remains our most pressing challenge. The strategic review of that business and the management changes that we have announced today reflects our focus on delivering improvement and removing its drag on overall Group performance.”
“In a challenging year, we have been resolute in pursuing a recovery plan that balanced improvements to profitability, with necessary investment and prudent capital management. The revitalised performance of Smiths News and the progress with our central restructure have established a solid foundation for the Group’s medium term recovery.”
Connect did manage to reduce its net debt to £73.9m, down £9.5m from 2018, led by sales of 6 Tuffnells’ depots in September 2019.
The company, which was formed from the demerger of WH Smith in 2006, comprises Smiths News, the UK’s largest newspaper and magazine wholesaler, Dawson Media Direct, which supplies international media to airlines and travel points, and Tuffnells.
Main image credit: Getty