London - Connect Group, the largest newspaper and magazine distributor in the UK, reported a marginal rise in full-year underlying pretax profit and said it launched a new delivery service with Amazon as its first customer.
Shares in the company jumped more than 16 percent in early trade on Wednesday on the London Stock Exchange.
The “click and collect” delivery service, launched along with Amazon.co.uk, will utilise Smiths News' existing distribution capabilities and offer twice-a-day distribution to independent retail outlets, the company said.
“This is an exciting development which should help investors shake off some of the concerns that caused the share price to recede earlier in the year and which has the potential to be a significant profit opportunity,” WH Ireland analyst Nick Spoliar said in a note to clients.
The company, previously known as Smiths News, said its newspaper division benefited from price rises and a boost from the soccer World Cup.
Underlying pretax profit rose 0.2 percent to 50 million pounds ($79 million) in the year ended August 31, from 49.9 million pounds a year earlier. Underlying revenue rose 0.1 percent to 1.80 billion pounds.
Underlying profit at its Connect News and Media division, which includes Smiths News and its media supply business Dawson Media Direct, rose 8.1 percent.
Connect's newspaper distribution business Smiths News, which accounted for 77 percent of the group's underlying profit, saw a 0.3 percent fall in underlying revenue to 1.52 billion pounds, while underlying operating profit rose 7.3 percent to 42.9 million pounds.
The company said it gained from 15 million pounds of sticker sales associated with the soccer World Cup.
Smiths News currently has a 55 percent share of the UK market, distributing 40 million newspapers and 14 million magazines each week, according to the company's website.
Connect Group announced a final dividend of 6.6 pence, 4.8 percent higher than a year earlier.
Shares in the company were up 16.3 percent at 160.50 pence at 07h14 GMT.
Reuters