Johnston Press sees trading recover after tough summer

Media group Johnston Press today reported improved trading for the final three months of its financial year amid 'severe headwinds' facing the advertising market.

Johnston Press chief executive Ashley Highfield said The Scotsman had benefited amid its 200th anniversary celebrations. Picture: Malcolm Irving

The owner of The Scotsman said total revenues during the quarter ending 31 December were 1 per cent higher than a year earlier, helped by a “strong performance” from the newest addition to its portfolio, the i newspaper, acquired in a £24 million deal in April.

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Johnston Press sees revenues boost from i newspaper

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That rise compares with a 5 per cent decline seen in the previous three-month period, in the immediate aftermath of the Brexit vote.

Johnston Press also said that last month had brought “impressive newspaper sales results”, with The Scotsman enjoying average growth of 2 per cent year-on-year, helped by its 200th anniversary.

In a trading update, chief executive Ashley Highfield said that, after a “very difficult” summer amid the post-Brexit uncertainty, trading had improved in the fourth quarter on the back of strategic initiatives implemented during the first half and signs of improving business confidence.

He added: “Whilst we expect the overall market environment to remain challenging for both the group and the industry as a whole, we remain focused on delivering on our strategic priorities of growing our overall audience, driving the further success of the i newspaper, delivering a more efficient editorial and sales operation and strengthening the balance sheet.

“The market for quality news brands, that know their audience, in print and online, in a world of ‘fake news’, ‘alternative facts’, and internet ad fraud, is increasingly appreciated by our readers and advertisers alike. Our continued drive to maximise operational efficiencies gives us flexibility in the face of a challenging market and gives the management confidence that we can make further progress.”

Total revenues for the full year were down 6 per cent, although Johnston Press said the decline in advertising revenues, excluding classifieds, slowed to 3 per cent in the final three months, compared with a 7 per cent year-on-year fall seen in the third quarter.

The group said that the weakness of sterling following the Brexit vote has pushed up the cost of imported paper and ink, but a continued focus on costs enabled it to maintain an adjusted underlying earnings margin of some 22 per cent, “believed to be amongst the highest in our industry”.

Analysts at house broker Liberum said that Johnston Press had not “rested on its laurels” during the year, but added: “The market remains tough and it would be too early to assume that fourth-quarter trends will continue in the medium term”.

“Through an incredibly strict cost discipline the group managed to save over £25m, which means that since 2012 the group has already extracted costs of £100m,” Liberum said.

“Falling sterling has impacted the group negatively with regards to the paper and ink cost – thus any improvement in sterling should help when it comes to managing these costs.”