Ad revenue declines slow to 19 per cent at Johnston

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The Independent Online

Johnston Press, which owns the Yorkshire Post and The Scotsman, yesterday backed the "greater stability" in its advertising revenues, as the declines slowed over the past 10 weeks.

The company was upbeat on the news that ad revenues had fallen by 19.1 per cent since September, an improvement from the 26.1 per cent decline in the previous two months.

"The greater stability in advertising revenues we referred to in the half year announcement has continued," the group said, "with improvements in the property market offsetting a continued decline in recruitment revenues." The first half saw the revenues fall a third from 2008 levels.

Johnston's shares rose 4.6 per cent to 28.5p as the group said it would hit profit targets for the year. It said that with the stabilising ad revenues, "reducing declines in circulation revenues and continued progress with cost savings, the group is confident of delivering an operating profit in line with current market expectations for 2009".

The comparison with the previous year's revenues is also easing as the ad market, which had slumped with the onset of the credit crunch, fell off a cliff after Lehman Brothers collapsed in September 2008.

Johnston has been slashing costs in a bid to offset the slump in ad revenues. It said: "In addition to the significant cost reductions made by the group in the second half of 2008 and the first half of 2009, we expect further progress to be made with a year-on-year reduction for the full year to be around £50m."

Johnston announced last month that it was to close two printing plants, one in Kilkenny the other in Edinburgh. The titles affected by the closure will be moved to other presses at the group or printing will be outsourced. The closures, which should see costs fall next year, will result in a £20m write-off for the value of the presses.

The costs from redundancy will also be higher than expected, the group admitted, with exceptional cash charges of £12m for the year. It added that while the business was cash generative it was unlikely to cut debts because of the writedowns and redundancy costs as well as £15m refinancing fees.