Smiths News Plc (LON:SNWS) was discussed by Gervais Williams, Co-Fund Manager of The Diverse Income Trust plc (LON:DIVI) in a wide-ranging exclusive interview about the Trust and a selection of LSE-listed companies in the DIVI portfolio.
DirectorsTalk asked: Smiths News has made a solid start to 2025 with strong contract renewals and stable trading. What are their key areas of focus for growth as you look ahead?
Gervais said, “I think that’s a good question because in a way, Smiths News are delivering newspapers and newspapers as an industry category are declining. There’s fewer and fewer people reading newspapers each year. So, they’ve got the headwind effectively having the delivery of contracts with less and less volume per year.
What I’ve been impressed by in the Smiths News’s case is the management – they have actually brought in new services. It’s those new services which are beginning to pick up, e.g. high value recycling products. They may be moving into a couple of new ideas where they can actually use those vans to pick up products which need an urgent collection, early in the morning. That is actually very interesting because that’s the beginning, not just to offset the decline in turnover from the core newspaper business, but actually grow sales, grow profits.
Along with costs savings they’ve had to make along the way, what’s been interesting about this company is it hasn’t just survived, it’s thriving. We’re seeing its dividend growing up; we see further cash generation going forward and we think because most people assume it’s an industry which is in a permanent decline, they don’t see the value of the upside.
So, we’re very upbeat about Smiths News and its potential to grow its dividend going forward.”
