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Smiths News secures 'transformational' contract with News UK
(Sharecast News) - News wholesaler Smiths News said on Wednesday that it has secured a "transformational" long-term contract with News UK, publisher of 'The Sun', 'The Times' and 'The Sunday Times'. The new agreement reached is on enhanced commercial terms for Smiths News. It includes an expansion of the distribution territories in which the company is appointed as News UK's exclusive wholesale distributor, effectively securing national distribution of News UK's titles across all of Great Britain. This will take effect from July 2027.
It also includes an extension in the contract term of the company's appointment through to July 2037.
Smiths said the contract represents an incremental uplift in revenue of around £125m a year from July 2027 from the expanded territories.
In order to expand its network for national distribution from next July, Smiths said it would expect to incur one-off implementation costs during FY2027 as well as early-life transition costs.
The network expansion is expected to provide a return on invested capital in excess of the company's hurdle rate, and be accretive to earnings from FY2028 onwards.
Chief executive Jonathan Bunting said: "We are delighted to announce the extension and expansion of our partnership with News UK through to 2037.
"This deepens a relationship spanning more than 50 years, securing a reliable and sustainable national route to market for retailers and consumers - and enabling us to freeze delivery service charges for our retail customers for the life of the contract.
"Smiths News has a long and distinguished record in print distribution and industry-leading service. Today's announcement marks a significant milestone in securing a sustainable future for print news distribution, and reflects our shared commitment to supporting the industry for years to come."
At 1055 BST, the shares were up 5.7% at 67p.
Berenberg said: "While we leave our forecasts unchanged ahead of further guidance to be provided at the company's FY26 results in November, this milestone cements Smiths News's market leadership and secures a sustainable future for print news distribution in the UK.
"With strong free cash flow generation, a valuation of 6.1x FY26 P/E (15.9% FY26 FCF yield), and a clear path to long-term returns, the investment case is further reinforced, and we reiterate our buy recommendation."
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