Sparks - Smiths News

Smiths News delivered a solid set of H126 results. The 3.9% total revenue decline contained three key elements. The 4% decline in core newspaper and magazine distribution was resilient and within the guided range of a 3–5% reduction. 96% of newspaper and magazine revenues to 2029 have now been secured following the renewal of a long-term contract with the Guardian Newspaper Group.  Collectables saw solid revenue growth of 13.3%, while the company made good progress in growth verticals, where revenue grew by 35.1%. This was supported by good progress in recycling (revenue +50%), where the company has been working with waste brokers. H126 adjusted operating profit of £18.3m is expected to be slightly higher in H2, supported by the impact of the FIFA 2026 World Cup and Pokémon on the collectables business. Targeted cost savings for FY26 of c £4m are on track. Internal investment is progressing as planned, with investment in technology and systems expected to provide the foundations to enable the delivery of additional contracts across growth verticals. Free cash flow of £21.2m was strong supported by working capital, resulting in a net cash position of £7.8m at the end of H1. Adjusted EPS of 5.2p per share comfortably supports the unchanged 1.75p interim dividend.

The H1 results put Smiths News on track to meet FY26 expectations for adjusted operating profit of £37.2m. The company is exploring new growth opportunities in recycling, including coffee cups and waste electronic and electrical equipment. New categories continue to make progress, with book distribution delivering c 30,000 books per week, and the company is onboarding an internal optical and hearing care provider for overnight delivery services. In the longer term, the expected introduction of the UK Deposit Return Scheme in October 2027 could present an additional growth opportunity with Smiths News well positioned to service retailers requiring manual collection of containers, given its established track record with recycling collection and sortation in newspaper and magazines. These opportunities support the company’s strategy of broadening its early-morning supply chain management expertise and leveraging its existing infrastructure to overlay products and additional services across Smiths News’ established UK footprint.