Trading conditions 'difficult'
Profits fall as Johnston Press battles ‘painful changes’
Publisher Johnston Press, whose stable of 200 titles includes The Scotsman, The Southern Reporter and The Fife Free Press, reported a 31% fall in half-year profit as it continued to rely on growth of the ‘i’ newspaper.
In a statement, the group said trading conditions across the industry continue to be difficult, especially in classified advertising which was down by a third.
Adjusted pretax profit for the 26 weeks to 1 July fell 31.4% to £6.7 million from £9.7m a year earlier. Adjusted EBITDA, which reflects underlying performance before the payment of £15.2m in interest charges on its debt, came in at £19.7m, down 13.7% from £22.8m.
Net debt is down from £209.4m to £191.2m.
Growth in digital revenues and the i newspaper was offset by an overall decline in print.
Revenue, excluding classifieds, grew 4.6% to £85.6m on the corresponding period last year, and digital advertising revenues by 14.8%, also excluding classifieds.
The ‘i’ newspaper, acquired in April 2016, delivered first half revenue of £14.5m, up 28.6% in the comparable 12 week period post acquisition, and EBITDA of £3.7m, up 42%. Circulation revenue at the title increased from £4.4m to £11.0m and advertising revenues from £800,000 to £3m.
The company said group advertising revenue had been flat compared to “heavy declines” in 2016.
Digital audiences grew 15% to a record high of 26.5m unique users a month and page views were up 20% to over 110m average page views per month.
A focus on the larger titles resulted in strong profit contributions from The Scotsman, The Newsletter (Northern Ireland), The Yorkshire Post, The Sheffield Star and the Portsmouth News.
The Media Sales Centre, which now accounts for 20% of advertising revenues, was in growth during the period, as a result of an ongoing sales transformation programme.
Chief executive Ashley Highfield said: “This is a business which we have long believed needed to transform, but once done, could return to growth.
“Thus, since 2012 we have been making the necessary and at times painful changes to transform Johnston Press into a truly cross-platform business.
“Whilst trading remains challenging, the business has responded and, as a result of our substantial efforts and clear strategic focus, I am very pleased to announce that we have posted revenue growth in the business (excluding classifieds) of 4.6% during the half.
“Digital revenues (excluding classifieds) have outweighed the declines of print advertising revenues, helped by an editorial focus that has resulted in digital audiences at a record high, and by a fantastic performance from the i newspaper which has achieved significantly enhanced performance during the sixteen months since acquisition .
The group delivered Adjusted EBITDA of £19.7m in the first six months, in line with the board’s expectations. Having implemented the next phase of planned cost reduction initiatives aligned to the group’s wider publishing strategy, the board remains confident in the outlook for the rest of 2017.”
Last week the company announced plans to cut jobs among journalists at its Scottish weekly titles, following a strategic review.
This was in response to readers migrating to digital platforms which were changing the way people read their news.
The National Union of Journalists said 25 posts were under threat at 24 out of 28 Scottish weekly titles.
In a statement the company said: “The pace of change in the media industry is showing no signs of abating, as we continue to face the challenges posed by our audiences migrating to digital platforms, and industry giants like Google and Facebook changing the way people read their news.
“We have seen over the past year at least, a number of newspapers closing or being put up for sale as publishers struggle to confront the challenges.”
It added: “This restructure is designed to ensure our news brands are able to continue to serve their communities – as their only source of trusted local news.
“However, it does mean that there will be a significant reduction in the number of editorial roles.
“We are working closely with the NUJ in Scotland, and will continue to do so, in order to ensure we can achieve the best outcome for affected staff within the new structure.”