Newspaper group reports falling revenue
Scotsman owner warns of lower profits and plans more cost cutting
Johnston Press, publisher of The Scotsman, Falkirk Herald and other local newspapers, said it had suffered from weak trading in and around the General Election and has warned that first half profits will be below expectations.
The trading environment was “challenging” during the period and revenue for both advertising and circulation showed a further fall, said the company.
Although it performed well in the first quarter, the second quarter was impacted by a slowdown in general trading as well as specific weakness in the run up to, and the period immediately after the election. It expects July to show an improvement, but there will be more cuts.
During the 26 weeks to 4 July total revenue is expected to fall by about 5% year on year compared to 4.3% for the first half last year, 2014.
Total advertising revenue is expected to fall by some 5% (2014: 4.6%).
The London-based company said: “In the second quarter, around the time of the election, a number of national and local advertisers chose to reduce or delay their spend in both print and online.”
Circulation revenue is also expected to fall by some 5.5% during the period, while circulation volumes are 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. However, first half profits are likely to be marginally below last year.”
Digital revenues also continue to grow, and it expects to report growth of about 17% in the period and achieve its digital revenue growth targets.
The business continues to deliver strong cash flows, and has reduced net debt, in line with expectations.
“As a result of the off-trend trading in the second quarter, the business enters the second half from a lower base than planned, and revenue trends, whilst expected to improve, may be impacted by market volatility during the rest of the year,” it said.
“The group will continue to invest to drive revenue growth, but will also continue to make cost savings, to fund that investment. However, at this stage, we anticipate full year profit will be slightly below market expectations.”
Ashley Highfield, chief executive (pictured above), said: “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.”
** The National, launched in November by the Herald & Times in Glasgow to campaign for Scottish independence, had sales averaging 16,900 this year, according to a company statement.
An unspecified number of these were signed up as subscriptions when the paper launched after the independence referendum last September. The over-the-counter sale was not declared.