Profits dip at Johnston Press as regional giant reports further plunge in ad revenues

Regional newspapers giant Johnston Press has reported half-year profits down 15.6 per cent year-on-year to £81.6 million on revenue down 6.3 per cent to 293.1 million.

The UK’s second-biggest regional press publisher reported advertising revenues in the first half down 9.5 per cent – despite revenues from its online operations increasing by 52.1 per cent year-on-year.

Johnston Press’s operating profit margin – which in recent years has been the highest in the industry – dropped year-on-year from 30.9 per cent to 27.9 per cent.

Johnston reported today that the picture for the second half of the year looks set to be even worse – with advertising revenues for the first seven weeks of the second half down 21 per cent year-on-year.

Chief executive Tim Bowdler said: ‘The first half of this year has been impacted by a particularly difficult trading environment with significant and deteriorating year-on-year reductions in advertising revenues.

“The trading environment since the beginning of 2008 has deteriorated sharply and in overall terms represents the most challenging conditions encountered by the group for a considerable number of years. The seeds of the decline are to be found in the crisis in world financial markets which started in the second half of 2007 and has now spread to the wider economy.

“The impact on the property market, car sales, retail, employment and consumer confidence is all too evident with independent economic forecasts generally painting a very gloomy picture for the next 18 months at the very least. Reflecting this, our share price performance has been very disappointing throughout the period.”

Johnston reported that property advertising has been particularly hard hit, with print advertising in this sector down 33.1 per cent year-on-year in June.

The only good news in the interim report was from Johnston’s digital publishing operations.

In addition to revenue growth of 52 per cent, monthly unique visitors to the group’s websites were said to up 42 per cent to 11.2 million.

The company said: “We are committed to the continued expansion of our digital media offering through ongoing and increasing levels of organic investment as we continue to develop our local cross-media franchises. We also continue to pursue a strategy of layering our markets with specialist print publications which complement our core newspaper titles. The objective of this is to reach new audiences and to attract new advertising revenues.”

To read expert analysis on commentary on the Johnston Press interims, click on the links below:

Peter Kirwan on the state of play in the UK advertising market

Kirwan on the Johnston Press conference call

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