Advertising slump mirrors the economy says Johnston Press

Published on Wednesday 12 November 2008 20:26

EDINBURGH-BASED Johnston Press yesterday revealed the slump in the advertising market had worsened since the first half of the year, dragged down by a near-50 per cent fall in property adverts.

Unveiling the group's latest figures, Tim Bowdler, Johnston Press's chief executive, said newspaper advertising was "a barometer of what happens in the wider economy" and the current recession was "significantly worse" than the 1990s one.

Johnston, which owns The Scotsman and hundreds of local and regional titles, said total advertising revenues for the 44 weeks to 1 November were 15.5 per cent down on the same period of 2007.

Since the half-year, there were year-on-year falls in property of 48.4 per cent, employment 32.1 per cent and motors 24.3 per cent. Display ads were down 12.1 per cent on a like-for-like and constant currency basis.

At the half-year results announcement in late-August, the group said total advertising revenues had fallen 9.5 per cent in the first half of 2008.

On prospects for the depressed property advertising market, Bowdler said: "That must hinge on financial markets.

"I don't think it is likely there will be a rapid turnaround in property."

However, Bowdler said Johnston remained cash-generative, and expected to deliver a full-year operating profit at the lower end of market expectations. The City consensus for 2008 is a pre-interest, pre-tax profit of 120 million.

Contract printing revenues are 5.3 per cent ahead of last year.

The company made 7.6m of cost savings in the first half of the year, and has cut 12 per cent of its workforce since the start of 2008. It said it was reviewing all parts of the business to identify further cost savings.

The company's aim is to keep the costbase aligned to the state of the advertising market, although there were no hard and fast cost-cutting targets, Bowdler added.

Johnston said that, within the advertising decline, print advertising was down by 17.4 per cent while digital had showed slower growth in recent weeks after growing 37 per cent in the period under review.

"Just over half of digital revenues are employment-related," Bowdler said.

The group expects a full-year exceptional charge relating to redundancies and reorganisation of about 7m, and a 9m exceptional accelerated depreciation charge linked to the closing of print operations in Northampton.

Bowdler, who retires as chief executive at the end of this year, said the Bank of England's interest rate cuts were the right thing to be doing, but that economists believed it took nine months for a cut to work through to the economy. "We would not expect it to work quickly," he said.

Johnston's net debt was 465m at 1 November, down by 19m from the end of June.

Johnston's shares closed down 1p at 18p.