News publisher Reach is reviewing the production of its supplements that are currently printed on the continent as part of its Brexit risk assessment, in a move that could see the printing of more than a million magazines a week return to the UK.
The PLC, formerly Trinity Mirror, announced its year-end results earlier this week.
Sales in the year to 30 December 2018 increased by 16.2% to £723.9m on the back of its acquisitions of the Northern & Shell business a year ago.
Adjusted operating profit came in ahead of market expectations, rising by 16.8% to £145.6m. However, the group filed a £200m impairment charge made up of £92.5m in goodwill, £95m related to publishing rights and titles, and £12.5m for freehold buildings. This resulted in a statutory operating loss of £107.6m.
Reach said that “significant uncertainty” created by the process of the UK exiting the EU had increased the group’s overall risk profile in the short-term.
Among a number of steps being taken, the business said it was: “Reviewing overseas printing arrangements and, where deemed appropriate, making arrangements to mitigate the risk to the publication of our titles.”
And although the group currently sources most of its newsprint in the UK or from non-EU sources, it said it was “reliant on some key overseas suppliers who may be affected by onerous customs practices in the wake of no deal Brexit.”
Reach is also looking at the potential wider impacts on its operations, including “reassessing all interactions with non-UK based partners / suppliers / employees across the group to ensure we can respond quickly to any potential changes to laws and regulations (such as data protection) in the event of a no deal Brexit.”
Disruption to newsprint supply is viewed as a key operational risk, and Reach is already carrying enough stock “to be able to mitigate the risks associated with delays of up to one week”.
Many of Reach’s newspaper supplements are already printed in the UK, at YM Group and GD Web Offset, which also prints New! magazine; while Prinovis prints OK! magazine.
However, the weekend magazines for flagship title the Mirror moved to TSB in Germany after Polestar collapsed in 2016. PrintWeek understands the titles could be relocated to YM Chantry, which already prints supplements for the Express.
The Saturday Mirror has an ABC circulation of around 627,000, while the Sunday Mirror’s is 432,000.
Sales at Reach’s own newspaper printing operations, which now include the West Ferry Printers site in Luton, increased to £157.2m from £131.2m, of which £121.6m was recharged as inter-group sales (2017: £99.6m).
Contract printing revenues grew by 15.5% to £24.6m, while overall printing revenue including newsprint supply increased by 12.7% to £35.6m.
Reach made costs savings of £20m, £5m ahead of plan, despite a “significant” increase in the price of newsprint which resulted in newsprint rising from 11% to 13% of its adjusted cost base.
Reach had not commented at the time of writing.