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Profits plunge as ads slump hits Johnston
(Daily Mail (London) (KRT) Via Acquire Media NewsEdge) Aug. 24--Regional newspaper group Johnston Press will on Wednesday announce a sharp fall in interim profits following a sharp decline in advertising, though cost savings are expected to help its full-year results.
Johnston, whose titles include The Scotsman, the Lancashire Evening Post and the Sunderland Echo, is set to report a fall in turnover of about ten per cent to ?288 million in its first half.
Property and motors classified advertising are each likely to be down about 18 per cent and though some of this has moved online, most of the fall is down to the economic downturn.
In July and August the situation deteriorated further with revenue from advertising down about 20 per cent, with property classifieds falling nearly 40 per cent. Total advertising revenue is expected to fall by about 16 per cent over the course of the year.
The company is likely to take an impairment charge of about ?100 million on the difference between the value of the assets on its books and their actual worth, contributing to a decline in profits of about 24 per cent to ?58 million in the period.
Johnston may also suspend its interim dividend, though it is still expected to pay a full-year dividend.
However, the company, led by chief executive Tim Bowdler, has made considerable efficiency savings from new printing presses at Portsmouth and Sheffield and it appears likely to sell its Northampton printing operation.
Johnston's full-year margins are expected to be 24 per cent and though it is unlikely to cut editorial costs significantly, the City is expecting cost savings of up to ?20 million a year by 2009.
In May it announced a ?200 million rights issue at 72p a share and the sale of a 20 per cent stake to Malaysian investment firm Usaha Tegas after plummeting revenue and high debt led to fears it would breach its banking covenants.
The subsequent cut in interest payments on debt will help the company, whose shares are now 50p.
To see more of the Financial Mail on Sunday, or to subscribe to the newspaper, go to http://www.financialmail.co.uk.
Copyright (c) 2008, Financial Mail on Sunday, London
Distributed by McClatchy-Tribune Information Services.
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