Johnston losses narrow as revenue stabilises

Published on Thursday 11 March 2010 20:16

JOHNSTON Press, the owner of The Scotsman and Britain's biggest publisher of regional newspapers, yesterday told investors that it is well-placed to benefit from an economic recovery after cutting debt and seeing advertising partly stabilise.

The group, which runs more than 300 titles, said advertising revenue fell 26.5 per cent in 2009 but that the trend had improved since the second quarter.

It was down 11.2 per cent in the final quarter of 2009 and just 7.3 per cent lower in the first nine weeks of 2010.

John Fry, chief executive of Johnston Press, said: "The year ended with the group in a much stronger position than it began."

He said advertising was more stable, circulation trends had improved and digital revenues were growing.

His comments came as Johnston posted narrowed pre-tax losses of 113.8m, compared with a loss of 429.3m in 2008.

Revenues in 2009 were down 19.5 per cent at 428m, while underlying operating profit was down 44.1 per cent at 71.8m, both figures slightly ahead of City expectations. Analysts had expected operating profit of 65m.

The company said that since the refinancing of its debt last August it had traded in line with expectations.

Net debt was down by 55.3m to 422.1m. "That being the case we have no immediate plans to raise capital," Fry said. No final dividend is proposed.

Stuart Paterson, Johnston's chief finance officer, said the group would like to see net debt to core earnings at a ratio of significantly below four times, rather than the current 4.5 times, before restoring a dividend.

The classified advertising staples of jobs, property and cars have come under pressure in the economic downturn.

However, Edinburgh-based Johnston said property advertising had seen year-on-year growth in both November and December, while motor advertising grew in December.

The company said it had responded to the print pressures by improving its websites, and digital revenues rose 12.3 per cent during the final quarter, despite a 10.6 per cent drop over the year.

Johnston said to reduce its dependency on advertising it is currently testing charging customers to read online content.

"No decision has been made to roll out paywalls across our sites but we remain open to developments in this area," it said.

The group made cost savings of 49.3m in 2009, including closing two print presses. Johnston has shed a quarter of its staff over the past two years.

Freddie Johnston, a director of the company for 50 years, for many as chief executive, is one of three directors stepping down from the board at the AGM next month. Ian Russell, group chairman, said his departure was a "genuine landmark" and that he would be greatly missed.

Shares in the group closed 0.75p lower at 27.5p.