Smiths News profit falls on restructuring costs; hails contract wins
Smiths News PLC on Wednesday celebrated contract wins but reported a decline in annual profit.
Shares in the Swindon, England-based distributor of newspapers and magazines in the UK were down 11% to 72.00 pence on Wednesday afternoon in London.
Pretax profit for the year ended August 29 was £32.1 million, down 15% from £37.9 million a year earlier, reflecting £4.1 million in adjusting charges, compared with a £2.1 million net credit a year earlier.
The charges included £2.3 million in network reorganisation costs, £1.1 million in technology transformation costs and £700,00 million in planning costs related to its national distribution contracts.
Revenue was £1.04 billion, down 2.6% from £1.06 billion.
The football World Cup and "continued demand for Pokemon products" contributed to an "excellent" performance in the collectables market.
Go National, Smiths News's strategic expansion programme, saw the company win contracts with News UK & Ireland, Telegraph Media Group Holdings Ltd, Associated Newspapers Ltd, Frontline Ltd and Seymour Distribution Ltd.
Smiths News said the contracts would represent an incremental uplift in revenue of around £375 million a year.
Smiths News proposed a final dividend of 3.90 pence per share, taking the total dividend to 5.65 pence, an increase of 1.8% from 5.55 pence a year earlier.
Looking ahead, the company said: "Trading in financial 2027 has started positively. The focus for the upcoming year is the successful execution of expanding our footprint and transitioning publishers as their contracts commence, alongside ensuring our technology investment programme is successfully implemented across the footprint. Whilst there will be a short-term impact on profitability for the business in financial 2027, we anticipate the expansion will deliver incremental net profit from financial 2028 and we will start to see the real benefits from financial 2029 and beyond."
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