(Alliance News) - Connect Group PLC on Wednesday reported a drop in interim earnings but expressed confidence in its outlook.
Shares in the newspaper and magazine wholesale distributor were trading 6.2% higher at 18.95 pence each on Wednesday afternoon in London, but down from 29.60p six months ago.
For the 26-week period to the end of February, Connect Group posted pretax profit of GBP6.7 million, down 58% year-on-year from GBP16.0 million. Revenue was down 4.5% at GBP623.1 million from GBP652.3 million.
Adjusted pretax profit was GBP16.3 million, down from GBP18.6 million, driven by a "material decline" in the market rate for waste paper, a national discount retailer removing the news and magazine category from its stores, the loss of a contract with British Airways in Connect's DMD business from June 2019, and the cost of new IFRS16 lease accounting standards.
Dawson Media Direct supplies newspapers, magazines and inflight entertainment to airlines and travel points in the UK. British Airways is part of International Consolidated Airlines Group SA.
Administrative costs were GBP31.3 million, a significant rise from GBP23.2 million reported the year prior.
No dividend was declared, unchanged from the year prior.
Looking ahead, Connect Group said it expects to continue to make a profit despite the disruption caused by the Covid-19 outbreak, adding that it expects its sales to gradually improve as the current lockdown restrictions are relaxed.
"The Covid-19 pandemic will clearly have a material impact on the group's performance in the second half of the year, the quantum of which remains unclear. However, our markets and business model are well placed to recover as lockdown restrictions ease," said Interim Chief Executive Jonathan Bunting.
Separately, the company said that Gary Kennedy has now stepped down from his role as chair. He will be succeeded by David Blackwood, a non-executive director of logistics firm Stobart Group Ltd.
By Ife Taiwo; ifetaiwo@alliancenews.com
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