Britain’s largest listed publishing company Trinity Mirror plc (LON: TNI) (LSE: TNI.L) rose by 4% today after it released a solid trading update for the 27 weeks to 3 July 2016. This comes ahead of its interim results announcement which is due for release on 1 August.
As has been the case in recent periods, Trinity Mirror is recording falls in its print circulation and revenue. During the period, Trinity Mirror’s publishing print advertising and circulation revenue fell by 17% and 5% respectively, while print advertising and circulation revenue declined by 14% and 5% respectively.
However, Trinity Mirror continues to deliver strong growth in its digital audience. For instance, digital revenue grew by 15% in Q1 and by 14% in Q2. This helped to reduce the negative impact of print on total publishing revenue figures, although it was still down by 8% for the first half of the year.
This contributed to a reduction in group revenue of 8% on a like-for-like basis over the 27 week period, although declines were moderated somewhat in Q2 versus Q1. Therefore, Trinity Mirror anticipates that its interim results will be in-line with previous guidance, which is probably a key reason why the company’s share price rose by 4% following the results.
Regarding its strategy, Trinity Mirror is obviously intent on growing its digital segment as quickly as possible. As a result, digital investment remains high and Trinity Mirror intends to take the necessary mitigating actions to support profits given the higher uncertainty now present following the recent EU referendum.
Trinity Mirror is forecast to increase its EPS by 6% in the current year and by a further 1% next year. Although its strategy appears to be sound, it could take time to come to fruition in my view and in the meantime, it continues to experience difficulties in its print segment. Therefore, I feel it is worth adding to a watchlist rather than buying at the moment.
The author does not own shares in Trinity Mirror at the time of writing.