Smiths News shares drop as weaker profits overshadow major contract wins

4th Nov 2026 13:39

(Sharecast News) - Shares in Smiths News slumped on Wednesday after the newspaper and magazine distributor reported a decline in annual earnings and highlighted the short-term impact of investment on profitability, with investors seemingly shrugging off news of major contract wins.

Shares were down around 9% at 74p by 1406 GMT after the company reported a 16% fall in statutory operating profit to £34.6m on the back of transformation and network reorganisation costs.

However, adjusted operating profit slipped 1% to £38.7m, slightly ahead of company-compiled consensus at £38.4m.

Revenues declined 2.6% to £1.04bn from £1.06bn a year earlier. The company said the ongoing structural decline in newspaper and magazine sales was partially offset by strong demand for collectables, including products linked to the FIFA World Cup and Pokémon.

Smiths News highlighted a series of long-term contract wins with major publishers, including News UK, Telegraph Media Group, Associated Newspapers, Frontline and Seymour Distribution, extending agreements through to 2037. The contracts are expected to generate around £375m in additional annual revenues, with a total potential opportunity of £600m.

To support the expansion, Smiths News plans to invest £21m-27m in its 'Go National' programme, adding approximately 700 distribution routes and 23 depots across Great Britain.

However, the company warned that expansion and transition costs would weigh on profitability in the current financial year, with incremental net profits expected from FY2028 and material benefits anticipated from FY2029 onwards.

Chief executive Jonathan Bunting called it a "transformational moment for our business", adding: "We have secured a number of significant, long-term national contracts with leading publishers, providing a sustainable revenue platform through to 2037 and underpinning our ambitions for continued investment and growth."

The company proposed a final dividend of 3.90p per share, bringing the full-year ordinary payout to 5.65p, up from 5.55p a year earlier.

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