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Profits rise at Johnston Press as costs fall £24m

Regional publisher Johnston Press has reported a 4.3pc increase in like for like operating profits for the first half of 2013 following £24m of cutbacks.

Overall revenues at the newspaper group fell by 9.8pc to £144.3m in the period to 29 June, although there was a 13pc rise in digital revenues from £10.3m to £11.6m.

But a £24.3m reduction in costs enabled the group to post an operating profit of £28.6m, up from £27.4m in the same period in 2012.

The figures published this morning represent the first increase in like-for-like operating profits at the group for seven years.

However the operating profit figure does not include a one-off £194.5m write-down on the value of its newspaper titles, which pushed the group to a statutory pre-tax loss of £248.7m for the first half of the year.

The statutory figures also included a £57.9m write-down on print press assets.

Advertising revenues were down 13.6pc across the period, but the decline appears to have slowed in the second quarter of the year with a 17.6pc drop in January narrowing to 6.3pc in June and July.

Excluding the impact of the five daily titles which switched to weekly format in May 2012, circulation revenues fell by just 0.7pc.

Chief executive Ashley Highfield said  “Johnston Press has continued to make good progress during the first half in the implementation of its strategy for growth, completing the re-launch of its print titles and investing further in technology to build its digital platform whilst maintaining a tight control on costs.

“It is encouraging to see the benefits of our actions starting to come through, with the Group achieving its first like for like operating profit increase in seven years.

“Although the economic outlook is not without challenges, momentum has continued into the second half, underpinned by the re-structuring and re-focusing of the business, an increasingly stable advertising market and growth in circulation and digital revenues.

“This has enabled us to report like for like operating profit up 4.3pc, digital revenues up 13.3pc and net debt down 15.3pc, with total advertising decline rate narrowing to 6.3% during June and July 2013.”

“We remain focused on adapting our business to the changing environment in which we operate and reaching the point where digital growth will offset any further decline so that we can return to overall top line growth.

“In view of this operational progress, we expect the results for 2013 to be broadly in line with current market expectations.”

16 comments

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  • August 28, 2013 at 8:55 am
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    Considering the state of this firm’s premises in some areas, I am not surprised they have made a profit! They seem to spend nothing on their offices!

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  • August 28, 2013 at 9:10 am
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    No doubt the internal newsletter had gone around congratulating everyone on their hard work, when in fact it is those now without work that have contributed most to this so called ‘profit’. Advertising revenues will never get back to where they were. At one time the free design service for advertising within the publications meant something, but the quality simply isn’t there anymore. The once creative studios are no match for an agency these days, where once the designers, in many cases, came from agencies.

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  • August 28, 2013 at 9:26 am
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    So, let’s cut to the chase Ashley. Where’s our payrise?

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  • August 28, 2013 at 9:41 am
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    Paperwatcher, they won’t spend on the offices because most are up for sale – too few people in them to warrant any outlay. Agree with JP Cost Cut Victim – staff have been cut to the bone yet are still expected to turn out quality print products AND put news online AND do video creation and uploading. And for no pay rise. But as long as The City is happy, that’s all fine!

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  • August 28, 2013 at 9:55 am
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    More profits made on the backs of two groups of people – sacked workers, and those left to take on ever-more work. And why doesn’t Hold The Front Page seek a comment from the NUJ when it’s perfectly happy to quote the PR outpourings from the chief exec?

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  • August 28, 2013 at 9:58 am
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    Well that should secure the pay rises in the pay review anyway. If they refuse a good rise now there will be pandemonium.

    A lot of people have worked very hard to help secure these profits but for no more reward (often much less) than they were getting before. I hope JP recognise this, finally, in monetary terms rather than just with a written pat on the back.

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  • August 28, 2013 at 10:07 am
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    For some reason, your report makes no mention of circulation figures. The circulation revenue you do include is, of course, temporarily boosted by widespread price rises for many JP publications in the last year. Falling circulations, which have been quite dramatic in some areas, will soon make an impact on the revenue. You also omit any reference to JP’s huge burden of debt, which currently stands at £306.4m.

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  • August 28, 2013 at 10:12 am
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    ‘JP Cost Cut Victim’ – Please, I wish you would, stop using the term victim, – isn’t it time you moved on? – The real victims are those left to stagnate at JP, people like myself left with no hope of a payrise, and clinging onto the hope of redundancy – a better prosepect of the long slow death that is unfolding currently

    Also take off those rose-tinted goggles will you? The in house ad’s have never been agency standard. It’s a sausage factory. If what you say was true, those in-house staff would have agency jobs, for agency pay.

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  • August 28, 2013 at 10:30 am
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    FAO JP Cost Cut Victim:
    The studio staff are more than capable of competing with agencies on every level. What you failed to mention is the quality of work now being sent to them.
    Gone are the days when full campaigns were created, customer visits to sit one on one with advertisers to discuss their advertising. Magazines and anything that requires design has been taken away from them.
    JP is now happy for highly skilled, knowledgeable designers to sit there being dumbed down creating basic adverts that any monkey using microsoft office could create.
    With the reduction in staff of the JP studio’s there is now no time to do what designers should do … design. They are just there as a production line to bash out the work as quickly as possible, and clear their job lists.

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  • August 28, 2013 at 11:31 am
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    So apart from the £300m+ debt at punative rate, a pre-tax loss of almost £250m, a c.10% fall in newspaper derived income and a 13.6% drop in ad revenue, everything is rosy because we saw a rise in operating profits!

    The circulation figures out today are going to be as interesting as the next lot of 6 month accounting figures from JP. How much are their costs going to fall during this period?

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  • August 28, 2013 at 1:05 pm
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    FAO Me, myself and I
    I refer to myself as a cost cut victim because, no matter what my current circumstances, that is what I was. “Isn’t it time you moved on, M,M and I?” I wouldn’t have stayed at JP if I felt I was stagnating. If you are not happy you have a choice, stay or go. I fail to see how that makes you a “real victim”. By the way, previously I worked in an agency but found the hours longer, the work less varied and I met fewer people on a daily basis.

    Bernard –
    I take on board your comments re: the quality of work designers are currently being asked to do and that designers are now creating basic adverts, but surely this is why design work went to India. Why were some JP Studios spared if they are just bashing out ads on a production line? They’d have been better retaining a studio for high-end work/clients only. Everything else to E-KCS.

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  • August 28, 2013 at 1:43 pm
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    FAO JP Cost Cut Victim
    Advertising went to India to save £££’s. Initially it was only supposed to be the ‘basic’ adverts, and as you say leave the creative stuff to the designers…. but as in all good JP plans.
    More advertising went to India. Magazines were then taken away, followed by in-house advertising, meaning Studio staff could be reduced to save more £££’s.
    It appears the spared studio staff are now used to pick up the scraps, late ads and dig sales staff out of the **** when called upon.

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  • August 28, 2013 at 1:56 pm
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    FAO ‘JP Cost Cut Victim’

    We’re kind of going off the point here, but you were correct in pointing out the clutching-at-straws manner that JP have announced the story. Elsewhere the same story has been reported in a much more negative (& honest) light.

    As for myself, you are correct in pointing out I have a choice whether to stay or go. I’m chosing to stay because redundancy is so tantalisingly close! I have enough years invested here to make this worth my while.

    I long ago accepted the nature of the work I do. I work long hours, with very little variation, and meet very few people on a daily basis, but all without the agency pay.

    But you are wrong in assuming the work has gone to India for anything other than finanicial reasons, hence why you name yourself are a ‘cost-cut’ victim. The only reason I have not joined you yet will be because the outsourcing hasn’t gone as smoothly as JP had hoped for. To say the work was moved for quality reasons is ridiculous. The ad’s you see in print now all come from India, so blaming the lack of quality onto the homebased studio’s doesn’t wash i’m afraid.

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  • August 28, 2013 at 2:03 pm
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    11 per cent fall in newspaper sales made me laugh. Ours is at least 20 per cent! If redundancy was worth taking I’d have put my name in.

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  • August 28, 2013 at 2:44 pm
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    Let’s not forget who caused JP’s debt problem. When profits were in excess of 30 per cent, directors received lavish bonuses, shareholders got huge dividends – adding up to around £400 million. At the same time JP borrowed £400m to buy up other newspapers and companies.
    When the financial crash came, profits dried up and the value of their purchases plummeted – but the debt remained. The chief executive in charge of this debacle moved on with a golden handshake and a fat pension. The workforce paid the price – and is still paying.

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  • August 28, 2013 at 4:58 pm
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    I must not have expressed myself well. I never assumed work went to India for anything other than financial reasons, but JP also identified “the changing needs of the creative function from high end creative staff to more ad setting …” That sounds like a quality reason to me, although the cost saving was salient. I believe that any remaining studios should be doing what India, it appears, cannot. Roles should not be duplicated. If JP is paying qualified designers to pick up “scraps and late ads” as well as paying E-KCS something’s not right.

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