Daily Mail and General Trust (DMGT) has initiated a reorganisation process amid the challenging market conditions facing some of its businesses. The London based company revealed the same in its pre-close trading update published Thursday (29 September).
According to a Guardian report, the company will launch a strategic review of its businesses and cut more than 400 jobs.
In a statement, the company said, "The reorganisation initiatives, which include headcount reductions, are expected to result in total cash-related exceptional operating costs in the current financial year of approximately £50 million [$64.96m]." It added that this was more than the £15m it had previously anticipated in May.
DMGT said that £35m of the expected costs were directly related to its reorganisation plan. It explained that these initiatives were being implemented to protect the profitability of some of its businesses.
The owner of the Daily Mail, Mail on Sunday and Mail Online further said that this was part of a strategic review of its portfolio of businesses. It said this was in effort to create a greater focus in the DMGT portfolio.
The company also gave an insight into its financials in the trading update. It said reported group revenues grew 4% year-on-year for the 11 months to August 2016, while underlying earnings growth was flat.
Revenues of all its divisions except media grew for the period. This division saw revenues decline by 5%. DMGT said this was amid continuing poor performance of print advertising. With regards to this, the report further said, "Total year to date underlying advertising revenues across dmg media were down by an underlying 4%, with a 12% decline in print advertising being partly offset by 17% growth in digital advertising."
With regards to the outlook for the full year, the company said it was in line with current market expectations. It added that this was supported by the stronger US dollar relative to the British pound.
David Reynolds, a Jefferies analyst opined that DMGT should be split into two. "Split the group in two: DMG B2B and DMG Media...Very different dynamics, no synergies, unlocks value as investor can value the assets properly. As we wrote in June, potentially much to be done at DMGT, perhaps widened scope implicit in the £50m exceptional charge starts DMGT on that path," he was quoted as saying by the Guardian.