Haymarket earnings rise as half of revenues come from outside UK

Parent company of Campaign and What Car? is debt-free.

Haymarket earnings rise as half of revenues come from outside UK

Haymarket increased annual earnings by a third last year as half of revenues came from outside the UK.

The owner of What Car?, Autocar, Campaign, PRWeek, myCME and Finance Asia was also debt-free for the first time since 1997.

Kevin Costello, chief executive of Haymarket, said paying off its debt had been "liberating" and allowed the company to invest in the expansion of the Haymarket Automotive division while increasing profits.

Earnings before interest, tax, depreciation, amortisation and exceptional items rose to £3.5m in the year to June 2018, from £2.6m a year earlier.

Underlying revenues grew thanks chiefly to growth in two areas – Haymarket US and Haymarket Business Media in the UK.

Revenues fell to £163.5m from £172.7m on a statutory basis because Haymarket sold its largely UK-focused consumer titles, including FourFourTwo and Stuff.

Costello said the company has adopted a deliberate strategy of "recycling" the profits from those divestments to help to fund a £50m, multi-year investment in Haymarket Automotive since the middle of 2017, including the launch of an online What Car? new car buying portal last year.

Haymarket now generates 70% of its revenues from digital, data and live activity as it has reduced its involvement in print publishing.

Lord Heseltine, chairman of Haymarket, said: "These are encouraging figures, despite the changes in the media landscape and the continued macroeconomic uncertainties, particularly around the impacts of Brexit.

"The results show a business in very sound financial shape and reflect the progress with our strategy, which continues to position us well for the future: investing in the company’s technology infrastructure to build diversified revenue streams around a raft of new opportunities."

Costello said: "This set of results underlines real momentum in deploying our strategy of creating a balanced portfolio of diverse revenue streams in our chosen markets."

He added that "deleveraging our balance sheet" by selling property and some publishing assets had been key.

"From a situation where we had £150m debt in 2012, we’re now effectively debt-free, which is liberating," Costello said. "We’re investing in innovative new revenue opportunities around paid content and events, as well as new ecommerce platforms."

Haymarket has also diversified through global expansion as the international operation, which includes the US, Asia, India and Germany, has gone from a third of group turnover in 2012 to 50% in 2018.

"It’s a good thing," Costello said. "The fact that our income is evenly distributed between the UK and the rest of the world insulates us from the vagaries of the global economy."

He said Haymarket was focusing on "what’s under our control" to cope with the uncertainty around Brexit and it has made "contingency plans" in case of change in three main areas – foreign currency, the cost of paper (which comes outside the UK) and regulation such as GDPR.

Haymarket said it is planning to have invested in excess of £20m over two years in Haymarket Automotive by the end of the current financial year in June 2019.

Costello said: "One of the benefits of being a privately held business is we’re choosing, to a degree, to go on a profit holiday to invest in our automotive business."

Recent figures from the Society of Motor Manufacturers and Traders have shown falling UK vehicle sales, but Costello said the decline was largely down to diesel-powered cars and the overall drop was less than expected.

"We launched What Car? in 1974 at the height of the oil crisis," he pointed out. "There’s never a better time to launch a new product than near the bottom of the cycle."

Haymarket’s operating profits dropped to £7.4m last year from £16m a year earlier, when the group received a big windfall from the sale of its motorsport arm.

Operating profits are expected to jump in the year to June 2019 following the sale of PistonHeads in December 2018.

Costello said: "We don’t have any immediate plans to divest of any other assets in the portfolio."

He added that the future for Haymarket was likely to involve more collaboration with other media businesses in a fast-changing market.

"We’re a good partner," Costello said, pointing to joint ventures with Ascential on Spikes, Bauer and Burda on Frontline, and Haymarket’s India operation. "Increasingly, we’re looking at opportunities where one plus one can add up to three." 

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