Johnston Press hit by house market woes as property advertising slides

Published on Wednesday 27 August 2008 21:12

JOHNSTON Press yesterday revealed that tumbling returns from the property and job markets had left its advertising revenues down more than a fifth.

The group, which publishes titles including The Scotsman, axed its half-year dividend and told shareholders that advertising trends continue to deteriorate.

Reporting an 18 per cent fall in profits for the six months to 30 June, Johnston said advertising revenues declined 9.5 per cent.

Property print revenues fell by 17.8 per cent over the six months. In June there was a decline of 33.1 per cent. Employment advertising also suffered , down by 10.4 per cent but off by 16.7 per cent in June.

The Edinburgh-based firm added that advertising revenues in the first seven weeks of its second half were down 21 per cent on a year earlier.

Chief executive Tim Bowdler yesterday warned that the company's future performance "will inevitably be linked" to the economies of the UK and to a lesser extent that of the Republic of Ireland.

Bowdler told The Scotsman: "Newspaper advertising is a lead indicator.

"We would expect us to be ahead of the downward curve, though I am not for a minute saying that we are at the bottom. We have no visibility in terms of a forward order book.

"We can only read the economy and I don't think anybody is expecting an early improvement. We are in for a difficult period."

Bowdler refused to rule out job losses at the company and said it had achieved a year-on-year cost reduction of 7.6 million in the first half. Underlying pre-tax profits for the six months were 62.5m against 76.3m a year earlier.

However, a 109m write-down against the value of its assets resulted in overall losses of 53.7m. Bowdler said that the 109m was a non-cash figure, arrived at by auditors looking at future cash flows.

It was mainly attributable to the firm's Irish operations though a small amount related to the Scotsman group. He said that a number of estate agents had stopped advertising in August but added that Johnston Press "expects that to change" in September.

Bowdler admitted that revenues from JP's digital business had grown "from a small base", rising from 7m in 2007 to 11m.

Asked whether digital publishing was the future for media companies, Bowdler replied: "It is part of the future but I believe that print is also a fundamental part of the future.

"I do not subscribe to the misguided view that newspapers will disappear and we will all be reading about the news on our blackberries and mobile telephones."

Johnston Press shares closed down 3.5p at 47.5p yesterday, a fall of nearly 7 per cent.