ii view: magazine publisher Future prints record results

Shares in this owner of brands including Country Lifestyle and What Hi Fi have more than halved year-to-date. Buy, sell, or hold? 

Full-year results to 30 September

• Revenue up 36% to £825 million
• Pre-tax profit up 58% to £170 million
• Final dividend of 3.4p per share, up from 2.8p per share
• Net debt of £424 million following acquisitions, up from £176 million 

Chief executive Zillah Byng-Thorne said:

"2022 has been a busy year for us, as we allocated over £400m to complete five quality earnings-accretive acquisitions which added new capabilities to the Group and helped us to achieve leadership positions. 

"Looking ahead, whilst we are monitoring the macroeconomic climate, we remain confident in our strategy and the growth opportunities that we are uniquely placed to capitalise on, which we expect to deliver modest profit growth and market share gains."

ii round-up:

Magazine and website operator Future (LSE:FUTR) today detailed record results following several acquisitions but pointed to likely modest profit growth in the year ahead given the more challenging economic backdrop. 

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Future, whose content reaches one in three adults online in the UK and US, delivered a more than one-third jump in full-year sales to £825 million, pushing full year pre-tax profit to £170 million from the prior year’s £108 million. 

Future’s shares fell by more than 4% in UK trading having come into this latest announcement down by around three-fifths year-to-date. Shares for advertising giant WPP (LSE:WPP) are down by around a fifth during 2022, while shares for ITV (LSE:ITV) are down by close to a third. 

Future, which offers more than 200 publications including Cycling Weekly and PC Gamer, announced in September the departure of its chief executive Zillah Byng-Thorne by the end of 2023, having joined the business back in 2013. 

The FTSE 250 company has completed five acquisitions since October 2021, enhancing its subscriber numbers and helping it achieve leadership positions in both Women's Lifestyle and Wealth content arenas.

A 5% rise in online media sales stripping out acquisitions over the full year more than countered a 2% fall in magazine sales. Geographically, US sales led, climbing 7% compared a fall of 1% in the UK. 

Relatively recent acquisitions for Future, which also owns comparison website GoCompare, include women’s magazine Marie Claire and media group Dennis, whose publications include MoneyWeek, Computer Active and Minecraft World.  

ii view:

Global specialist media platform Future operates through the two divisions of media and magazines. Brands for its online media division include PC Gamer, Digital Camera and its GoCompare financial website business. The magazine business focuses on publishing specialist content, with a combined global circulation of over 4.5 million delivered through more than 100 magazines and over 700 bookazines published once a year.

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For investors, the highly uncertain economic outlook cannot be ignored. A cost-of-living crisis for its customers could see them cutting or reducing subscriptions, while the pending departure of its chief executive warrants consideration. A surge in energy costs and a series of energy providers going under has also combined to hinder energy switching at comparison sites such as its GoCompare. 

On the upside, growth via acquisitions continues while its brand and revenue diversity are worth remembering. Ongoing cash generation is assisting its focus on group debt while an estimated price/earnings (PE) ratio below the three-year average suggests the shares are not obviously expensive. 

On balance, and with diversity of brand and the group positioned to capture the consumer switch from paper publications to online sites, shareholders might be inclined to stay put, although new investors will likely want to see more evidence of positive progress.

Positives: 

• Diversity of titles and business revenues
• Growing online customer base

Negatives:

• Uncertain economic outlook
• Advertising revenues can prove volatile

The average rating of stock market analysts:

Buy