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Pre-tax profits at UK-listed magazine publisher Future slumped by nearly a fifth this year as its US strategy stumbled and weak consumer spending hit audience numbers and digital advertising revenues.
Shares in the FTSE 250 group, which publishes magazines such as Country Life and Marie Claire, dropped as much as 27 per cent to 535p in early-morning trading after it released downbeat full-year results on Thursday. They closed at 629.5p.
The company said its pre-tax profits in the year to September fell 19 per cent to £138.1mn. Its revenues slipped to £788.9mn, dragged lower by a 19 per cent operational revenue drop in the US, where “challenging market dynamics” knocked crucial advertising sales.
Future had previously voiced its ambition to build its presence in the US market, where it claims its online content reaches just under one in three adults. In April this year, the publisher hired Jon Steinberg — an American digital entrepreneur and BuzzFeed graduate — as chief executive.
Analysts at Peel Hunt said “the new CEO came in at a challenging time” when “audience numbers had been falling, leading to weakness in digital advertising and ecommerce, which had been key growth drivers for many years”.
The company’s US strategy stalled as weak consumer demand hindered efforts to exploit the online advertising and ecommerce commissions through which Future earns more than 70 per cent of its US revenue.
A prolonged period of rising US interest rates and high inflation have hit consumer demand for technology products in particular, Future said, which in turn has affected spending by technology companies essential to the US advertising sector.
When it comes to “buying products — especially costly products like PCs and laptops, the consumer is still strained right now”, Steinberg said in an interview on Thursday. This results “in major technology advertisers limiting their spending on marketing and advertising”.
Future forecasts it will return to single-digit revenue growth as consumer sentiment improves in 2024. Responding to a question from the Financial Times, Steinberg said he would consider potential bids for the company if that brought more value to its shareholders.
“I am here to operate the business as well as I can, and ultimately if somebody makes a bid for the company, as a fiduciary [to the shareholders], the board needs to consider that,” he said.
The publisher owns 230 specialist media and magazine brands — on topics ranging from film and photography to gaming — which tends to attract advertising companies and ecommerce affiliates that want to target customers based on their individual interests.
Future had also attributed its underperformance in the US to the fact that its regional advertising sales team is “much more nascent” than in the UK, having fewer clients and less expertise.
The company announced a new growth strategy, underpinned by an investment of £25mn-£30mn over the next two years, part of which will be channelled into strengthening US online advertising and improving specialised content.
The board is recommending a final dividend of 3.4p per share for the year ended September 30 2023, according to its annual report.
Future also announced on Thursday that Penny Ladkin-Brand, its chief financial and strategy officer, would step down from the board later next year.
Additional reporting by Daniel Thomas in London