Johnston enjoys first profit rise in seven years

The Edinburgh-based group said total revenues fell by 9.8 per cent on a like-for-like basis to £144.3m in the first half of 2013, with broadly similar declines across all categories.

JP said this was a pattern replicated across the industry as consumer confidence remained low in the first five months of 2013.

It reported a like-for-like operating profit of £28.6m, up 4.3 per cent on the same period last year.

Total advertising revenues fell 13.6 per cent during the period. But digital revenues rose 13.3 per cent and accelerated by 31.9 per cent in June and July.

The group reduced net debt by 15.3 per cent to £306.4m.

Johnston Press booked a £248.7m pre-tax loss from non-recurring items, including a £194.5m impairment charge on publishing titles and a £57.9m write-down on print press assets.

Ashley Highfield, chief executive, said: “Johnston Press has continued to make good progress during the first half in the implementation of its strategy for growth, completing the relaunch of its print titles and investing further in technology to build its digital platform while maintaining a tight control on costs.

“It is encouraging to see the benefits of our actions starting to come through, with the group achieving its first like-for-like operating profit increase in seven years.

“Although the economic outlook is not without challenges, momentum has continued into the second half, underpinned by the restructuring and refocusing of the business, an increasingly stable advertising market and growth in circulation and digital revenues.

“This has enabled us to report like-for-like operating profit up 4.3 per cent, digital revenues up 13.3 per cent and net debt down 15.3 per cent, with total advertising decline rate narrowing to 6.3 per cent during June and July 2013.

“We remain focused on adapting our business to the changing environment in which we operate and reaching the point where digital growth will offset any further decline so that we can return to overall top line growth.

“In view of this operational progress, we expect the results for 2013 to be broadly in line with current market expectations.”

The group cut costs by £24.3m and increased its operating margin by nearly 2 per cent to 19.1 per cent.

Johnston Press publishes 13 daily newspapers, 154 paid-for weekly newspapers, 37 free weeklies and a stable of glossy monthly lifestyle magazines.

The group has 215 local and e-commerce websites with complementary mobile sites and 31 tablet and smartphone apps.

Mr Highfield said that monthly aggregate audiences have grown by 100,000 users each month since the start of the year. Online users reached 11.5m per month during the first half, a year-on-year growth of 17 per cent, meaning the group reaches 1.7m additional digital users per month compared to this time last year, he added.

House broker Panmure Gordon said the Johnston Press “turnaround story (is) intact” and retained its ‘buy’ stance on shares, which closed down at last night.

Analyst Alex DeGroote said the results were ahead of expectations and added that the run-rate on advertising has improved meaningfully through the first half and beyond.

He also highlighted the 13.3 per cent growth in digital revenues to £11.6m in the first half.

“We remain very confident in the Johnston Press turnaround story, including upside from re-financing further down the line,” added Mr DeGroote, who trimmed expectations for full-year earnings before interest and tax to £58m from £59m, which still suggests year-on-year growth.