LONDON (Alliance News) - Distribution company Connect Group PLC delivered higher interim pretax profit on Tuesday and said it has signed a five-year contract extension with Northern & Shell.
Connect said its pretax profit for the six months to the end of February increased to GBP19.2 million, up 36% on the GBP19.2 million it posted a year earlier.
Revenue increased to GBP948.4 million from GBP909.9 million, up 4.2%, with both revenue and profit driven by a strong performance in the group's Parcel Freight division, where revenue grew 12%.
Connect said revenue for its core News & Media business, which delivers magazines and newspapers to newsagents and supermarkets, fell 2.1% in the half. Though lower, Connect said the revenue performance was ahead of its medium-term forecasts, illustrating the resilience of newspaper and magazine sales.
Connect said revenue from its books distribution arm was up slightly, 0.1%, with wholesale sales to traditional and online booksellers rising but libraries sales lower.
The company said it was on track to meet its expectations for the full year and said that confidence was illustrated by the 3.4% hike to its interim dividend, up to 3.0 pence per share from 2.9p a year earlier.
"The group has performed well in the first half, making pleasing progress with our strategic priorities. In particular, Parcel Freight has continued to deliver impressive revenue and profit growth, supported by the significant levels of new business secured in the period," said Mark Cashmore, Connect's chief executive.
In a separate statement, Connect said it has secured a five-year extension to its newspaper and magazine wholesaling contract with Northern & Shell, with the deal to run through to March 2021.
The new deal will secure GBP83.0 million in annual revenue, equating to 6.0% of the national newspaper market. Northern & Shell publishes the Daily Express, Daily Star and OK! Magazine, amongst other publications.
Connect shares were up 2.6% to 155.5p early Tuesday.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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