LONDON -- Daily Mail and General Trust (DMGT) is a business in transition at the moment, and there could well be hidden value for those willing to look beyond its headline numbers.
Its first-quarter trading update, released today, provided more evidence of how much progress is being made. Quarterly revenue came to 503 million pounds, up from the 495 million pounds produced in the same period last year. Daily Mail said underlying growth was a little higher than these raw figures suggested, at 3%.
A business of two halves
The split in the business can be clearly seen from the growth rates of the two main divisions. Whereas its consumer side is seeing sales decline at 4%, the business-to-business operations, or B2B, enjoyed growth of 8%.
The B2B division is quite a mix of businesses. It serves the insurance industry and runs events. There is also a 68% stake in Euromoney Institutional Investor (ERM), itself a 1.1 billion pound FTSE 250-listed company that publishes more than 100 magazines for the finance industry.
The decline of the newspaper industry has been well-documented, so it's no surprise that the consumer division is struggling. The price of the Daily Mail has recently been increased from 55 pence to 60 pence for the Monday to Friday editions, but further job cuts have been made.
The consumer side of the business does have its success stories, though. MailOnline, with its "Sidebar of Shame," attracted 127 million unique visitors in January, making it the most visited newspaper website in the world. There is also a 52% stake in a property information business, formed from the merger of findaproperty, primelocation, and Zoopla.
More growth to come
Investors were undoubtedly pleased with today's update, as they drove the shares 6% higher to 640 pence. Valued at 2.2 billion pounds, Daily Mail trades on about 13 times predicted profit for this year. Although the share price has risen sharply in the past six months, it remains well below its 2007 high.
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