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July 14, 2015

Johnston expects 5 per cent revenue and profit dip after spring ‘slowdown’

By William Turvill

Johnston Press has warned that its total revenue for the six months to 4 July is expected to fall by around 5 per cent year on year when its half-year results are announced.

The regional publisher said it saw a “slowdown in general trading” in the second quarter of this year. The statement noted specifically that a “number of national and local advertisers chose to reduce or delay their spend in both print and online” around the time of the election.

Johnston Press, which said this month “is expected to show an improvement”, said that in the 26 weeks to July 2015 its total revenue is expected to have fallen by 5 per cent year on year. This compared with a 4.3 per cent drop in total revenue in the first half of 2014, to £135.8m.

Johnston Press said that its total advertising revenue was expected to fall by 5 per cent, compared with a 4.6 per cent year-on-year loss in the first half of 2014 to £84.9m.

The company said circulation revenue is expected to fall by 5.5 per cent. In the first half of 2014, Johnston Press’s revenue from newspaper sales was £39.7m, down 1.7 per cent year on year.

The publisher said that despite action being taken to “mitigate much of the revenue reduction", its profits are “likely to be marginally below last year” when its statutory operating profit was £24.9m.

Johnston Press said, though, that its average monthly unique website users are growing by more than 20 per cent, and said that it expects to report digital revenue growth of 17 per cent in the first half of 2015. Last year, digital revenues grew by 23.4 per cent year on year to £14.1m.

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The publisher said: “With pleasing growth expected from its 1XL digital advertising exchange partnership, and further digital product releases during the second half, the business expects to 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. 

“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.”

Chief executive Ashley Highfield 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.” 

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