Johnston Press warns of more cost cuts as revenue falls

Johnston Press has reported a 27.9 per cent drop in full-year profits, with its new chief executive John Fry describing conditions as the worst in living memory.

The regional newspaper publisher made a £128.4m profit last year – down from £178.1m in 2007 – on revenue down 12.4 per cent to £531.9m. The operating profit margin was 24.1 per cent.

Announcing its end-of-year results this morning, Johnston Press said it had saved £32.3m in costs last year and cut 1,130 jobs – with full-time headcount now at 6,400.

Fry, who joined the company from Archant in January, replacing Tim Bowdler as chief executive, said 2009 would be “a very challenging year”.

He said further cost reduction measures would be taken after advertising revenues in the first two months of 2009 fell 35.9 per cent on the same period last year.

“The speed and severity of the collapse in advertising revenues that we suffered during 2008 has been beyond the collective experience of the entire industry and even the longest serving of those who work in it,” Fry said.

“In the short term there is little prospect of a turn in the advertising cycle and our expectation is for 2009 to be a very challenging year.

“Johnston Press will continue to develop its traditional print operations in a cost effective way while at the same time enhancing and upgrading the digital publishing platforms.”

Johnston Press chairman Roger Parry added that the severity of the advertising slump in the second half of 2008 “turned out to be far worse than we anticipated”.

Digital was the only growth area last year, with revenue up 31.1 per cent to £19.8m.

Debt warning

The company confirmed it was looking to sell its newspapers in the Republic of Ireland, where revenues fell 22.6 per cent.

And it warned that there was a “strong likelihood” that it would breach its banking covenants if it failed to find a buyer for the titles.

“There is particular uncertainty associated with the disposal of the Irish businesses in terms of timing, quantum and ultimate completion,” Johnston Press said today.

“Discussions to date with our advisers on the transaction are encouraging in terms of the level of interest.”

Net debt at the end of 2008 stood at £476.8m – down from £691.7m in the previous year following a £212m investment from Malaysian billionaire Ananda Krishnan.

The company wrote £417.5m from the value of its newspapers’ goodwill and said it would not be offering a dividend to shareholders.

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