Future looks brighter for JP's ad revenues

Published on Wednesday 7 March 2007 12:09

JOHNSTON Press, publisher of the Evening News, said today it believed the sluggish advertising market will soon pick up.

The company said it believed the advertising market's recent spell in the doldrums had more to do with the wider economic picture than a major shift to online channels.

Total like-for-like advertising revenues for the year to December 31 were down eight per cent to 345.1 million, although the market in Scotland held up fairly well, with annual revenues down just two per cent to 17.6m.

Scotland saw only marginal dips in income from the likes of job ads, and was the only region of the UK to boast an increase - one per cent - in motor ads.

All advertising categories across the group were down, with the exception of property ads, which saw increases in all regions and recorded a seven per cent jump to 67.7m overall.

"Recruitment advertising was worst affected, in part a result of the reduction in spending by local Government," the firm said.

Generally the gloomy pattern had continued into the current year, with Johnston Press chairman Roger Parry noting that total advertising revenues were down 2.9 per cent in the first nine weeks of 2007. "In the early weeks of 2007 income from advertising in print products is slightly down on the levels of the same period last year which reflects continued growth in property but further declines in motors, recruitment and display.

"However, the rate of decline is reducing and accordingly the board believes that we will continue to see an improvement in the year-on-year performance over the coming months," he said.

The increasingly optimistic advertising outlook came as the group - headed by chief executive Tim Bowdler and which is the UK's second biggest local newspaper publisher with almost 320 print titles - posted a six per cent fall in pre-tax profit to 146.7m. But at operating level, the profit was up four per cent to 186.8m and was helped by a number of recent acquisitions, including Scotsman Publications.

Total revenues for the Edinburgh-based group - which bought the Evening News, Scotsman, Scotland on Sunday and Herald & Post for 160m in December 2005 - rose 16 per cent to 602.2m. Johnston

said digital revenues rose by 36 per cent over he past year to 11.3m, while the number of unique users jumped by 63 per cent and page impressions were up by 53 per cent.

"Our online revenue continues to grow rapidly but from a small base," said Mr Parry. "We believe the main issues relating to advertising volumes are linked to overall economic conditions rather than online migration."

Looking ahead, Mr Parry said the group's investment in new print facilities would bring benefits this year. But he said that "overall we expect revenues to be at a similar level to 2006".

Seymour Pierce analyst Charles Peacock said that while profits fell, Johnston's profits performance was slightly ahead of 145m consensus forecasts. He added: "Johnston Press has confirmed the improving trend in regional newspaper advertising in the early part of 2007. Property remains the main growth category, but the rate of decline in motors, recruitment and display is reducing."