Newsteam Group returns to profit in 2023 as race to buy rounds continues

Newsteam Group (NTG), one of the UK’s largest home newspaper deliver companies has claimed to be back in profit for the first time since 2020.

While newly released figures for 2022 show the firm’s operating losses doubled to £1.4m, director Jonathan Kennett claimed the firm had made profits of £500,000 in the first eight months of 2023.

The 2022 losses were attributed to its strategy of rapidly acquiring rivals’ rounds and then building up the required infrastructure to service these new customers. NTG’s headcount increased from 189 to 245 while its total wage bill increased by 50% to £4.5m.

As of August 2023, the firm claimed to deliver newspapers and magazines to more than 100,000 doorsteps across 75% of UK post codes.

The tactics saw total revenue grow by more than 22% to £51.1m, but gross profits fell from 9.19% to 8.56%.

Kennett said the company had invested in its business development team to ‘increase the acquisition of good quality home delivery rounds in areas where we can achieve synergies with our existing network.’

The company said the ‘very significant reduction in the number of newsagents as volumes have declined and margins have been squeezed’ continues to present ‘an opportunity for NTG to acquire their home delivery rounds.’

The race to extend its coverage to more UK postcodes means the company ended 2022 “In a much stronger position to service more national contracts.’ It added: “publishers employ us to directly distribute their titles to end users.”

NTG revealed it also began to ‘diversify its home delivery options to include other products’ in late 2022 and is ‘actively looking at other diversification opportunities.’

The company said its profitability so far in 2023 was supported by ‘significant software improvement’ that maximised the number of drops per delivery round. The company spent £537,151 with round management tool PaperRound, 45% more than in the year before.

Despite the newly found profitability this year, the results state that NTG ‘will require the continued support of its majority shareholder to meet its liabilities as they fall due’ in the next 12 months. NTG reassured that the majority shareholder – Michael Kinton, also owner of PaperRound, has confirmed he is ‘willing to continue to provide ongoing financial support.’