Revenue still falling but profits up at Johnston Press

Despite revenue continuing to fall Johnston Press today reported a year-on-year increase in profits of almost six per cent during the first half of 2010.

The regional newspaper publisher, which counts the Yorkshire Post and the Scotsman amongst its flagship titles, recorded an operating profit increase, before non-recurring items, of 5.9 per cent to £40.5m in the 26 weeks to the start of July.

John Fry, chief executive, said it was its first year-on-year increase in operating profit since 2006.

The company said this morning – as it reported interim results – that its profit increase came as revenue in the period fell 5.2 per cent year-on-year to £207.3m.

While revenue remains in decline the rate has fallen considerably from the 25.4 per cent drop it reported a year ago, the company said.

The company was able to increase its profits through a combination of returning advertising yield, which it expected to improve further in the second half of the year, and its continued cost-reduction programme.

Costs in the first-half year were down by 7.5 per cent year on year to £166.8m – a reduction of £13.6m.

Headcount at Johnston Press was also reduced from 5,640 at the start of the year to 5,417 by 3 July, the company said. Editorial staff have been cut over the last year as the company introduced the Atex content management system.

Johnston Press said the new system allowed it to deliver ‘content via print, internet and mobile channels without the high level of rework the previous systems required”.

‘Around 80 per cent of our editorial staff now uses the improved system which will be rolled out to the rest of the group during the second half of this year,’the company added.

In the period the company reduced its net debt by £20.9m to £401.1m.

Overall advertising revenue in the first half of the year was down 6.3 per cent year on year to £124.1m – of this ad revenue in the Republic of Ireland dropped 25 per cent and in the UK by 5.2 per cent.

Employment advertising was the worst hit as the sector declined 16 per cent year on year. The motoring ad sector fell by 9.8 per cent, display by 3.6 per cent and other classifieds by seven per cent.

Property advertising was the only sector to grow. It increased 12.6 per cent year on year.

Circulation revenue was also down 2.8 per cent on the first half of 2009, the company said.

Johnston Press said the trend for the remainder of the year was one of improving ad yields.

‘As we move into the second half of the year, we have seen the improving trend in advertising revenues continue with total advertising in the first six weeks on a like for like basis only down 3.7 per cent,’Fry said.

‘Within this performance digital revenues grew by 9.7 per cent. Circulation revenues in July have also performed well and are down only 1.6 per cent.

‘These industry leading trends which demonstrate the strength of our publishing portfolio along with our continued focus on costs, efficiencies and debt reduction, give the board confidence, in the absence of a further deterioration in the UK economy, that the outcome for the group in 2010 will be in line with current market expectations.”

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