Regional publisher Johnston Press today revealed a 50pc increase in profits for the first half of 2018 while admitting that the market remained “extremely difficult” for its 200-plus regional titles.
Buoyed by a strong performance from cut-price national daily the i, the group posted a statutory operating profit of £7.4m in the period January to June compared to £4.9m in the same period last year.
However its chief executive David King highlighted a 15pc drop in advertising revenues as evidence of the “extremely difficult” market backdrop for regional and local newspapers, citing recent changes to the Facebook news feed algorithm as a contributory factor.
And Mr King, pictured, also revealed there have still been no agreement reached on the refinancing of the £220m worth of bonds which become repayable next June.
Commenting on the result, he said “There are two sets of issues affecting Johnston Press. The first is the group’s historical debts, including its pension obligations, which continue to weigh on our Balance Sheet. The second is the tough market conditions affecting the performance of our newspapers and websites. However, our resilient performance allowed us to generate an operating profit of £7.4m in the period, up from £4.9m in H1 2017.
“The strong performance of the i demonstrates that it is possible to grow a newspaper brand, despite the prevailing headwinds. The i grew its circulation revenues by 17% and its advertising revenues by 20% compared to H1 2017. The digital audience for inews.com grew to 4.2m in June, up from 1.3m in December last year.
“The market backdrop for regional/local newspapers is extremely difficult, as evidenced by the 15% drop in our adjusted advertising revenues from H1 2017. We have continued to make progress growing digital audiences to a record 27.3m average unique users per month.
“However, the continued challenges posed by Google and Facebook, seen most recently through algorithm and news feed changes, has contributed to total digital revenue decline, while Balance Sheet constraints has restricted the Group’s ability to invest, and counter these effects.
Mr King added that the group was continuing to explore its options for the refinancing or restructuring of its debt but, as yet, no decisions have been made nor agreements reached.
HTFP reported in June that one of the options being looked at by the group includes offloading its pension scheme to the Pensions Protection Fund, allowing a new owner to take control free of pension liabilities.
Today’s results follow recent claims by Norwegian investor Christen Ager-Hanssen that the company’s Board was planning to put it into adminstration in order to facilitate a “pre-packaged sale.”
In response, JP has challenged Mr Ager-Hanssen, who owns 20pc of the business, to come up with his own rescue plan for the group.
Today’s figures show overall revenues at the group were down 10pc in the first half of the year from £103.3m in 2017 to £93m this year.
Print advertising revenue was down 15.4pc but with cover-price rises largely off-setting the impact of circulation declines, circulation revenue fell by just 1.9pc.
According to the trading update, digital audiences across the group continued to grow, reaching a record 27.3m average unique users per month.
However it said the effects of algorithm and news feed changes by Google and Facebook contributed to total digital advertising revenues declining by 7.4pc to £12.2m.