In a trading update yesterday, the firm, whose newspaper titles include The Scotsman, Scotland on Sunday and Yorkshire Post, described the overall trading environment as “challenging” during the first half of the year.
It pointed to a solid performance in the first quarter, though the following three months were impacted by a slowdown in general trading as well as specific weakness in the run up to and surrounding May’s general election.
Digital revenues are expected to have jumped by around 17 per cent in the group’s first half, while readers visiting its sites are up by more than a fifth. The firm also said there were signs of a pick-up in trading so far in July.
But it cautioned that despite improved trading conditions since the election and moves to cut costs to fund revenue growth plans, full-year profits were still likely to be below expectations, pushing its shares down 20 per cent to close at 113.5p.
Ashley Highfield, chief executive of the Edinburgh-based group, told investors; “Trading conditions in the first half of 2015 have undoubtedly been challenging, especially in the period around the general election – a time when there was also a high degree of uncertainty in the wider market.
“Whilst we expect this will have an impact on profit both at the half year and the full year, there are positive indicators coming through with digital growth and continued strong cash flow.”
Johnston Press, which owns some 250 newspapers and about 200 websites, said total advertising revenues and circulation revenues in the 26 weeks to 4 July were down by around 5 per cent and 5.5 per cent respectively, though circulation volumes were showing a small improvement in the decline rate.
“Management took action to mitigate much of the revenue reduction in the period, limiting the impact on profits,” the firm added. “However, first half profits are likely to be marginally below last year.”
The group – founded in Falkirk in 1767 – added that it continued to deliver strong cash flows, and has reduced net debt, in line with expectations.
Full-year results released in March showed that underlying operating profits had risen by 2.8 per cent to £55.5 million for the year to 3 January, while net debt fell to £184.6m – compared with £302m a year earlier.
Last June, the group completed a refinancing exercise that raised £140m through a share placing and rights issue, along with £220.5m through the issue of bonds.