Johnston Press posts first operating profit increase since 2006

The regional newspaper publisher Johnston Press today reported its first year-on-year operating profit increase since the first half of 2006 as the rate of decline in advertising revenues continued to ease. Total revenues at the owner of the Scotsman and the Yorkshire Evening Post were £207.3m in the first half of this year, down 5.2% on the first six months of 2009. Its operating profit before non-recurring items of £40.5m was up from £38.2m in the first half of 2009, according to the company's interim results published today. Pretax profit in the first half of 2010 was £26.1m. The company said it was confident it would hit its year-end targets "in the absence of a further deterioration in the UK economy". Its cost base has been cut by £13.6m compared with the first six months of 2009, including a further reduction in headcount to 5,417 from 5,640 at the beginning of this year. Digital revenue grew 10.9% to £10m. "In the first half the group achieved an operating profit before non-recurring items of £40.5m up from £38.2m in the prior year. This represents our first operating profit increase reported since 2006," said the Johnston Press chief executive, John Fry. "As we move into the second half of the year, we have seen the improving trend in advertising revenues continue, with total advertising in the first six weeks on a like‑for‑like basis only down 3.7%. "Within this performance digital revenues grew by 9.7%. Circulation revenues in July have also performed well and are down only 1.6%. "These industry-leading trends which demonstrate the strength of our publishing portfolio along with our continued focus on costs, efficiencies and debt reduction, give the board confidence, in the absence of a further deterioration in the UK economy, that the outcome for the group in 2010 will be in line with current market expectations." The Johnston Press chief financial officer, Stuart Paterson, said he hoped advertising revenue would return to growth late this year or early 2011. "We were hopeful of seeing it some time this year and trends are continuing to improve," he added. "We are getting closer to that break-even point. Hopefully it will come, if not by the end of this year then early next year." Paterson played down the impact on ad revenue of government cutbacks in the public sector. "Using the broadest possible definition of public sector it is 11% of our advertising revenues. Overall it is a small proportion of our revenues," he said. "Much more important to us is overall consumer confidence. Trends have continued to improve – there is no indication [of a dip] at the moment." He said the company would look to cut more costs later this year – it previously announced it would look to make cost savings of "at least" £15m – but declined to put a figure on likely job losses. He added that it would be "much lower levels than previous years". The company shed 768 jobs in 2009 and 1,130 the previous year. Paterson said the departure of the group's divisional managing director north, Chris Green , was part of an ongoing reorganisation of regional management. Johnston Press also announced today a deal to incorporate digital directory service Qype into its local websites. Total print advertising fell 6.3% year on year to £124.1m in the first half of 2010, with the biggest fall in employment advertising, down 16%. Newspaper sales fell 2.8% to £49.1m. • To contact the MediaGuardian news desk email [email protected] or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000. • If you are writing a comment for publication, please mark clearly "for publication".