A regional publisher is planning to reduce its operating costs by up to £29m after warning it is facing a “tough” 2023.

Reach plc issued the warning in its full year results for 2022 this morning, two months after the group revealed a plan to shed 200 jobs across its divisions – around half of which will affect editorial staff.

Today’s report revealed that the group made an operating profit of £106.1m in 2022 – down £40m or 27pc on that of the previous year.

Chief executive Jim Mullen cited a range of factors for the profit slump, including a 60pc increase in print production cost which led to almost £40m of additional operating costs due to inflation during 2022, and a “slowing” demand for advertising, particularly in the period around the death of Queen Elizabeth II.

A cost action plan is now in place with the aim of reducing the group’s operating costs by between 5pc and 6pc.

According to today’s report, the group’s overall operating costs were £498.1m in 2022, meaning that a 5-6pc cut would see a reduction of between £24.9m and £29.8m.

Jim, pictured, wrote in his report: “We’re assuming that external conditions will remain tough and have planned accordingly.

“We’re a resilient and flexible organisation, with a long track record of driving operating efficiencies with the evolution of our operating model and through the process of continuous cost improvement.

“In 2023 we expect to generate significant savings supported by efficiencies in print procurement and distribution, the simplification of support functions and through managing the size of our teams – in some areas slowing down hiring while in others, regrettably, making some redundancies.

“We’re confident that our cost action plan will enable us to reduce operating costs by between 5pc and 6pc.”

In his report, chief financial officer Darren Fisher made clear that the cost reductions would mean job losses.

He wrote: “With macroeconomic headwinds likely to persist in the near term, we have put in place a further programme of cost reduction, which we’re confident will support a 5-6pc like for like in-year reduction in our operating costs for 2023.

“Savings will be generated throughout the business and include more efficient procurement throughout the print supply chain, the simplification of central support functions and the removal of editorial duplication.

“As part of these efficiency measures, we will unfortunately lose some colleagues from the business, a decision which has not been taken lightly, as we continue to focus on delivering our digital strategy, which will secure the long-term sustainability of the business.”

The results revealed that group revenue fell from £615.8m to £601.4m in 2022, representing a 2.3pc like-for-like drop, although digital revenue rose from £143.8m to £149.8m.

Overall print revenue was down from £465.1m to £448.6m, with advertising revenue slumping from £103.3m to £86.9m and circulation revenue down from £312.9m to £307.7m.

In his report, Jim also addressed strike action undertaken by members of the National Union of Journalists at Reach last year.

He said: “While this was not an easy period for anyone, we worked closely and diligently with our union representatives and our editorial teams to find an agreeable solution.

“We expect economic conditions will remain challenging in 2023 and so we will continue to consider our costs very carefully. A spirit of open debate and collaboration will again be essential as we work together to move forward as a stronger business.

“Whatever challenges we face, I am committed to maintaining a respectful and constructive dialogue with all the teams here at Reach and would like to thank them for their continued hard work and the talent they bring to our shared goal of creating a sustainable journalism business.

“It is important to me, both as the CEO and on a personal level, that Reach continues to be a stronghold for mainstream journalism, ensuring that our newsbrands serve their audiences for years to come.

“And while arriving at this position of strength demands change, and sometimes difficult change, I am proud of the significant investments we’ve made in our editorial teams over the past three years.

The group also revealed it now had 12.7m registered users, 5.6m of which had accessed its content within the last 28 days.

The report stated: “Being a growing part of our customers’ daily lives means customer interactions and the data they generate are more recent, more relevant and more valuable for advertisers.

“Registrations continue to be an important source of first-party data from our customers. Postcodes in particular are key to multiple customer insights and enable personalisation of content at a local level.

“They also enable geographically specific advertising, attractive to brands who want to run a campaign across our national network and titles, while only serving ads to customers in a specific area.

“During the recent train strikes for example, we worked with several national rail companies, who displayed ads for bus services but only in areas affected by rail disruption.

“We also worked with a well-known national furniture company, who, with our help, were able to target customers based within a certain number of miles of a showroom.”

The NUJ has called on Reach to “properly protect and reward” its staff following the publication of the results.

Chris Morley, NUJ Reach national coordinator, said: “It is clearly concerning for Reach employees that the threat of further cost-cutting has not receded despite more than 80 editorial roles already having been cut since the start of this year.

“In January, the company said it was targeting £30m cost reductions and today’s announcements around the full year figures suggest this is still what is being pursued to chase the faltering operating profits.

“The vastly expanded editorial footprint of the business in recent years – which now will also include 100 journalists based in the US – is already very thinly spread with consequent pressure on journalists to continue to fill all the gaps.

“There is still a huge thirst from the public for quality news and fundamentally it will be talented and experienced journalists who will deliver it – not artificially generated content that is currently being experimented on.

“It is vital therefore for Reach to maintain morale by maximising the number of journalists it employs through these hard times – and by making sure that it continues to make only reasonable demands over workload burden and intensity of work.

“And while there are currently undeniable difficulties in the advertising market and rising costs, that does not mean that Reach can ignore the impact that runaway inflation is having on its staff.

“The hurt from rising prices is felt even keener among our members, not least because so many are working from home and suffering soaring domestic energy and housing costs, combined with massive rising prices for food and other essentials.

“If Reach wants to keep its journalistic talent, it must expect to properly protect and reward them through these economic difficulties.

“We note that shareholders will pick up £14m in an increased final dividend, making a total of £22m paid out for the year. Employees must not be forgotten in the fair and equitable distribution of wealth being generated by the company.”