Smiths News (LSE: SNWS)

Last close As at 02/03/2024

GBP0.48

0.10 (0.21%)

Market capitalisation

GBP118m

Smiths News is the UK’s largest newspaper and magazine distributor with a c 55% market share covering 24,000 retailers in England and Wales. It has a range of long-term exclusive distribution contracts with major publishers, supplying a mix of supermarkets and independent retailers.

Volumes of newspaper and magazine sales have been falling at an average rate of c 5% pa for many years as first TV and radio and then online have taken over as the primary source of news consumption by an increasingly younger audience. Cover price inflation has partially offset lost revenue, but Smiths News has had to, and continues to, cut costs repeatedly to make up the shortfall. These characteristics are likely to persist into the future, but Smiths is developing new revenue streams to offset these pressures.

Latest Insights

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Industrials | Flash note

Smiths News — On track to meet guidance

Industrials | Update

Smiths News — Expansion initiatives begin to blossom

Industrials | Flash note

Smiths News — Resilient performance despite headwinds

Industrials | Update

Smiths News — Interim profits exceed pre-COVID levels

Sector

Industrials

Equity Analyst

Andy Murphy

Andy Murphy

Director, Financials & Industrials

Key Management

  • David Blackwood

    Chairman

  • George Cooper

    Head of corporate and finance

  • Jonathan Bunting

    CEO

  • Paul Baker

    CFO

Balance Sheet

Forecast net debt (£m)

8.1

Forecast gearing ratio (%)

270

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (1.2) 1.0 (2.1)
Relative (1.0) (1.7) 1.3
52 week high/low 55.2p/40.7p

Financials

The FY23 results highlight continued growth in adjusted operating profit, management’s tight control of the business and the ongoing annual efficiencies being delivered. Smiths may also renew several long-term publisher contracts this year, which could imply visibility over at least 80% of annual revenues to 2029. Furthermore, development of new profit streams is beginning to create momentum, which may have the potential to more than offset the slow decline in core profits and support the dividend. Our valuation remains unchanged at 89p, representing c 90% upside.

Y/E Aug Revenue (£m) EBITDA (£m) PBT (£m) EPS (fd) (p) P/E (x) P/CF (x)
2022A 1089.3 42.9 32.3 11.03 4.3 N/A
2023A 1091.9 42.7 33.4 10.68 4.5 N/A
2024E 1026.4 42.1 33.4 10.28 4.6 N/A
2025E 995.6 41.8 33.3 10.24 4.6 N/A