Trinity shrugs off newsprint costs

Trinity Holdings, the fast-growing regional newspaper group that publishes the Liverpool Echo, yesterday shrugged off high newsprint prices and sluggish consumer confidence to unveil record pre-tax profits of pounds 27.5m, 20 per cent ahead year-on-year.

Turnover was up 2 per cent to pounds 167.9m, reflecting conditions in the highly competitive regional market.

The Chester-based company, which last year bought the regional newspapers of Thomson Corporation for pounds 286m, is now the market leader, and expects to add to its holdings as the consolidation of the sector continues.

Analysts expect further contraction of the industry, with some titles closing and many more changing hands. Late last year, Reed Elsvier, the Anglo-Dutch media giant, sold its chain of regional newspapers to a management buyout team.

Commenting on the results, Philip Graf, Trinity's chief executive, said: "The delivery of record profits has been a fine achievement, particularly when faced with the rapid escalation in newsprint prices".

The UK newspaper industry has been rocked by increases of up to 40 per cent in the past 18 months, due to tight supplies and rising demand in emerging markets, particularly Asia. Trinity's newsprint bill rose by 25 per cent in the year. However, a cost-cutting exercise and tight controls combined to push operating margins in the UK to 19.8 per cent from 18.8 per cent, partly offsetting the rise.

Advertising markets were weaker in the second half, with volumes particularly low following the Budget in November.

Mr Graf said that the end of the newspaper price war had allowed the company to increase cover prices without suffering circulation losses.

The smaller North American operations had mixed results.