- Strong UK performance
- US still causing problems
After a tough couple of years, magazine publisher Future (FUTR) is showing signs of recovery – and the market is lapping it up.
The six months to 31 March were challenging, with organic revenue slipping by 2 per cent and adjusted operating profit down by 19 per cent at £106mn. Profits were hit particularly hard due to an adverse revenue mix and investment in the “growth acceleration strategy”, which was unveiled late last year.
However, Future achieved year-on-year revenue growth of 3 per cent in the second quarter, helped by a “very strong” performance from its UK price comparison business. The 30 per cent growth achieved by Go.Compare offset a decline in affiliate revenue – where Future earns commission when an online user clicks through to a retailer – and a difficult advertising market.
The group expects organic revenue growth to continue into the second half of FY2024 and has announced a £45mn share buyback programme which will commence shortly.
There are still a number of challenges. The US business has yet to return to growth, with organic sales down 11 per cent in the period. Cracking this market will be crucial to long-term success. Meanwhile, the £25mn-£30mn investment programme is suppressing margins in the near term: adjusted operating margins are only expected to reach 28 per cent in 2024, compared with 32 per cent last year.
Future is also in the hands of an entirely new management team. Chief executive Jon Steinberg only joined last year, while new finance officer Sharjeel Suleman has yet to get started. For now, therefore, we stick with hold.
Last IC view: Hold, 620p, 7 Dec 2023
FUTURE (FUTR) | ||||
ORD PRICE: | 967p | MARKET VALUE: | £1.1bn | |
TOUCH: | 964-970p | 12-MONTH HIGH: | 1,094p | LOW: 516p |
DIVIDEND YIELD: | 0.4% | PE RATIO: | 13 | |
NET ASSET VALUE: | 951p* | NET DEBT: | 31% |
Half-year to 31 Mar | Turnover (£mn) | Pre-tax profit (£mn) | Earnings per share (p) | Dividend per share (p) |
2023 | 405 | 66.4 | 46.9 | 0.00 |
2024 | 392 | 46.6 | 29.2 | 0.00 |
% change | -3 | -30 | -38 | - |
Ex-div: | na | |||
Payment: | na | |||
*Includes intangible assets of £1.6bn, or 1,376p a share |