ii view: magazine owner Future reports improved sales

Full-year results to 30 September

• Currency adjusted revenue up 1% to £788 million
• Pre-tax profit down 25% to £103 million
• Adjusted operating profit down 11% to £222 million
• Adjusted operating profit margin down 4% to 28%
• Net debt down 21% to £257 million
• Final dividend of 3.4p per share, unchanged from 2023 
• New £55 million share buyback programme

Guidance:

• Expects to operate at an adjusted operating profit margin of 28% for the year head
• Beyond FY 2025, now expects accelerating organic revenue growth

Chief executive Jon Steinberg said:

"We launched our Growth Acceleration Strategy one year ago and have made good strategic progress. We have invested in sales and editorial roles, successfully diversified and grown revenue per user, and we have further optimised our portfolio.

 "Looking ahead, whilst we remain mindful of the macro environment and the ongoing evolution of the media landscape, we are confident that the ongoing execution of our Growth Acceleration Strategy will drive long-term accelerating organic revenue growth."

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ii round-up:

Magazine owner Future (LSE:FUTR) today reported a return to sales growth as well as a new £55 million share buyback programme for the year ahead. 

Second half sales stripped of acquisitions rose 5%, up from a 2% retreat in the first half and taking currency adjusted annual 2024 revenues up 1% to £788 million. Future, which also owns price comparison site Go.compare, now expects accelerating organic revenue growth beyond the 2025 year ahead. 

Shares for the FTSE 250 company rose 10% in UK trading having come into these latest results up 23% year-to-date. That’s similar to scientific publisher RELX (LSE:REL) although behind a 42% gain for fiction publisher Bloomsbury Publishing (LSE:BMY). The 250 index itself is up 7% during 2024.  

Future’s magazine brands include Country Life, Marie Claire and PC Gamer. The fall in UK magazine sales reduced to 4% over the full year from a retreat of 6% in the first half.

Sales of specialist media content accelerated to a full year gain of 13%, up from 11% during the first half. Ongoing consumer demand to save money pushed annual Go.compare sales up 28% to £203 million. 

Started in December 2023, Future continues to pursue a two-year Growth Acceleration Strategy (GAS). Under the programme, required investment expenditure reduced Future’s operating profit margin by 4% from a year ago to 28% but with management now confident in maintaining that margin for the year ahead.

In October, head Jon Steinberg announced his planned stepping down come the second half of 2025 given his return to the USA. 

A total 2024 dividend of 3.4p per share stays unchanged from 2023. An AGM and first quarter trading update is likely in early February. 

ii view:

Started in 1985, Future creates specialist media content which is then distributed via methods including websites, magazines, and newsletters. Sales broadly come from the arenas of advertising, magazine subscriptions and affiliate sales. Affiliate sales work by allowing Future to promote and sell products or services of customers on sites such as Amazon in exchange for a commission on each sale. Geographically, the UK generates most sales at 64%, with the USA making up the balance. 

For investors, pressured consumer budgets left sales to individual consumers down 6% to £523 million, although improved from a fall of 11% over the first half. The departure of the CEO in 2025 raises some uncertainty. The impact of artificial intelligence or AI on media content production in the years ahead warrants consideration, while a forecast dividend yield of under 0.5% compares to yields of over 4% at WPP (LSE:WPP) and ITV (LSE:ITV).  

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More favourably, demand for the its Go.compare offering, generating a quarter of group sales, remains robust. Investment under the GAS programme is ongoing, initiatives under the GAS and including optimising its business portfolio have seen some small businesses being closed, while accompanying outlook estimates offer hope for improved customer demand going forward. 

For now, and despite ongoing risks, management initiatives and a consensus analyst estimate of fair value sat at over £13.80 per share look to offer grounds for continued hope. 

Positives: 

• Diversity of titles and business revenues
• Strong brand names

Negatives:

• Uncertain economic outlook
• Advertising revenues can prove volatile

The average rating of stock market analysts:

Buy