Johnston Press bucks trend with 14 per cent profits rise

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The Independent Online

Johnston Press, the Edinburgh-based regional newspaper group, yesterday reported a 14.3 per cent rise in interim pre-tax profit before exceptional items to £40.2m – bucking a trend that has seen other media groups issuing profits warnings.

Tim Bowdler, the chief executive, conceded that year-on-year growth had slipped in recent months but maintained that the group's 2001 results, buoyed by strong employment advertising, would show progress from last year.

Mr Bowdler said: "We are in a market place where there is a lot of gloom around with people talking down the national economy. But our local markets are still growing. We expect progress in the second-half but it's in the context of a gloomier outlook and, therefore, hedged with some caution."

Johnston, the publisher of titles in Scotland, the north Midlands and on the South coast, boosted its overall profit margin in the first-half by 1.4 percentage points to 31.2 per cent. Turnover for the period, including a small contribution from acquisitions, grew 4.4 per cent to £154m. Simon Baker, an analyst with SG Securities, said: "The numbers were a little bit ahead of what we expected. The second-quarter slowdown was expected after Trinity Mirror's results but it seems to be in manageable proportions."

The share price of Johnston, which has lost 20 per cent of its value since March, rallied 3.5p to 303.5p. Investors have feared that Johnston, and others are vulnerable to softer advertising volumes, while mergers and acquisitions on any substantial scale are unlikely before media ownership legislation is enacted, probably in 2003.

As the fourth-largest UK regional newspaper group, with nearly 10 per cent of the total market, Johnston is likely to be in the thick of any pick-up of M&A activity. It is unclear, however, whether it will be predator or prey. "We see three to five years of further consolidation," Mr Bowdler said. At that point we will come to a cross-roads but that's not where we are now."

He called on the Government to change rules that force most newspaper business sales to seek Government approval. "The prime change we would like to see in the Fair Trading Act is removing the condition of prior consent. The current rules are inappropriate given the diversity in the media today."

Meanwhile, Axel Springer Verlag, Germany's biggest newspaper group, reported an 83 per cent fall in interim profit to 14m euros (£10m). Most of the shortfall was due to the costs of internet investment and a decline in advertising sales.