Moves to diversify are paying off for Smiths

The group, which supplies around 30,000 UK retailers and newsagents, reported a 9.2 per cent plunge in like-for-like wholesale magazine sales in the year to August 31, blaming “wider economic pressures” for an ongoing drop in demand, as well as heavy price cuts in TV listings.

Newspaper sales were also knocked – down 2.7 per cent – as the Sun on Sunday kept the pressure up on rivals with its competitive cover price, having sparked a price war last year after launching into the market, although Smiths said prices were starting to rise again. The group said it was on track to see half of all profits come from outside of newspaper and magazine wholesaling by 2016, up from 29 per cent in the past financial year, as it diversifies towards digital media, as well as supplying resources to the education and care home market through recent acquisition The Consortium.

Its efforts to expand away from traditional print wholesaling, as well as cost cutting, paid off as annual underlying group pre-tax profits rose 11.6 per cent to £53m.

James Tetley, analyst at N+1 Singer, said Smiths’ aims to diversify look “increasingly achievable”.

Smiths said profits and revenues rose across all four of its divisions, with the core news distribution arm seeing earnings lift 2.5 per cent as cost cutting offset the newspaper and magazine sales falls.