Given the structural decline in print media, we note Smiths News, the largest UK newspaper and magazine wholesaler, is trading +6% following better than expected FY13 results. Smiths today reported sales GROWTH (+0.4%) for FY13, increased profits in all four divisions to a record +14.2% jump in pre-tax profit and Media enjoyed +1.9% LFL growth.
Given the shift to digital media, Smiths News suggests a slowing rate of decline in the headwinds faced by press and print media distribution. Such signs, in turn, are positive for Lagardere which is the world’s number one national press distributor and international press importer.
It may also be a positive for UPM Kymmene.
A reminder that on 6.9x 2014 EV/EBITDA, 0.55x EV/Sales, 1x P/B the Lagardere stock is cheap relative to a sector on 8.5x, 2.1x and 2.5x respective multiples. With a large valuation gap yet to close, we remain a buyer.
(NB: Within Smith’s Bertrams Books division it notes “exceptional” Academic eBooks growth of 38% (small incremental positive read to Pearson)
