LBG Media Braces for Hit from Weakening US Dollar
Publisher LadBible encounters potential £2 million financial loss due to dollar issues while expanding operations in the U.S.
LadBible's parent company, LBG Media, has signaled potential trouble ahead due to the ongoing USD weakness. In a recent warning to investors, the digital publisher admitted that the weak dollar could cost them about £2 million in revenues and £1 million in earnings this year.
The US dollar index has taken a nosedive by almost 10% since the start of the year, causing global investors to reconsider the country's colossal debt, weaker economic growth, and the impact of trade tariffs. LBG, who owns popular US digital media brand Betches, recorded a £366,000 loss from foreign exchange movements during the first half of the year – a significant jump from £15,000 last year.
Analysts at various brokerage firms, including Zeus, Investec, and Peel Hunt, have lowered their annual turnover and earnings forecasts for LBG by 2% and 5%, respectively, due to FX headwinds.
Despite the challenging financial landscape, LBG remains positive about achieving a 10% turnover increase at constant currency rates this year. In the six months ending March, LBG's sales surged by 13% to £43.9 million, thanks to a strong US presence. Brands like Netflix, Dunkin' Donuts, and PepsiCo form a part of their clientele.
Solly Solomou, LBG's CEO, expressed confidence in the company's growth prospects. He attributed the success to the diversified and agile model, which offers blue-chip brands access to the coveted 16-34-year-old demographic. Despite recent economic volatility due to tariffs, Solomou remains optimistic about the company's performance in the second half of the year.
LBG claims to be the UK's fifth-largest social and digital business, boasting an audience of 520 million as of March. Its other brands include UniLad and SPORTbible. The company's shares were up by 5.3% at 99p on Tuesday morning, yet they've still dropped by over a quarter this year. Future investments in the US might help LBG Media achieve its ambitious growth targets, considering the company's strong performance in the American market.
Investing in LBG Media could yield considerable returns, given its strong presence in the US and resilience against economic challenges. However, the weak US dollar and potential loss in revenues due to foreign exchange headwinds should be considered as part of the finance strategy for this business venture.
