Johnston Press closes plant due to ad decline
One of the UK's biggest newspaper groups blamed public sector cutbacks for a worse-than-expected decline in advertising revenues as it announced the closure of its Limerick plant.
Johnston Press, which publishes The News Letter and the Derry Journal, reported like-for-like advertising sales down by 5.4% in the 18 weeks to November 6.
This was an improvement on the 6.3% decline in the half-year to July 3, but the figure came as a disappointment to investors as it reflected a deterioration on the 3.7% drop reported in August.
The Edinburgh-based group said the worse-than-expected decline in advertising sales would be offset by total cost savings for the year of more than £20m, an increase of £5m on its previous forecast in May due to restructuring programmes and new IT systems.
The newspaper group has reduced its headcount by 330 in the year-to-date, bringing its workforce down to 5,300.
However, it stressed the rate of staff cuts had fallen this year, having reduced by 25% in the two years previously
Almost 30 people are set to lose their jobs as a result of Johnston's decision to close its press in Limerick, where it publishes the Limerick Leader, Limerick Chronicle, Clonmel Nationalist and the Offaly Express.
It is not yet clear where those titles will be moved to but there is some speculation they may use a facility in Kells, Co Meath before moving the operations to its printing presses in Portadown and Londonderry.
Advertising from the public sector only accounted for 9% of the company's sales in the third quarter, although the reduction was enough to slow the overall rate of improvement in advertising performance, Johnston said.
Recruitment advertising was down 29% year-on-year in the past 18 weeks but advertising revenues from its property pages and on its websites grew in the period.
Shares dropped 8% following the announcement.
Analysts at Numis retained their 'buy' rating on the stock, but cut profit forecasts from £37m to £34m for this year and from £47m to £40m for next year.
Johnston's shares have plummeted in value from 490p in 2007 to 11p today, after the company recorded its worst-ever drop in sales during the recession.
The newspaper group posted pre-tax losses of £429.3m in 2008 and £113.8m in 2009 before making a profit of £26.1m in the first half of 2010.