Johnston maintains revenues improvement in UK

Newspaper group Johnston Press maintained its recent trading improvement today, but urged a “degree of caution” about prospects in 2008.

Johnston, which publishes 18 daily newspapers and 291 weekly titles, said advertising revenues increased by 0.2% in the five months to November 30, with like-for-like UK print advertising revenues showing a fall of 0.8%. During the first six months of the year, the equivalent figures showed reductions of 1.5% and 2.9% respectively.

The company said Ireland’s slowing property market caused advertising revenues in the country to decline by 1.2%, compared to growth of 10% in the first six months.

Overall, Edinburgh-based Johnston said it expected a “satisfactory outcome” for the financial year as a whole.

The publisher of the Scotsman and the Lancashire Evening Post added: “Recent turmoil in world financial markets and the consequential effects on the domestic economy and consumer confidence must lead to a degree of caution when considering prospects for 2008.”

Shares fell 2% to 250.5p today as analysts noted the cautious guidance and the weaker trading picture in Ireland, where the company publishes titles including the Longford Leader and the Leinster Express.

Numis Securities said in a note: “The risk for 2008 is that the fragile advertising improvements delivered in 2007 are derailed by general UK economic weakness.”

Alex DeGroote, an analyst at Panmure Gordon, said the company’s pledge to further boost levels of investment in digital activities also fuelled concerns about the potential impact on operating margins in 2008.

However, he added: “Given heinously low market expectations, today’s pre-close update does not read so badly. Ad growth trends are basically in line with expectations, and the scope for 2008 earnings per share downgrades is modest rather than massive.”

Helped by a resumption of growth in the south of England, Johnston said like-for-like print employment revenues for the five months fell by 1.8%, compared to a reduction of 4.3% in the first half.

Property advertising grew throughout the five months albeit at a slower rate due to strong comparatives and the rate of decline in motors advertising continued to slowly ease.

Newspaper sales revenues grew on a like-for-like basis, with increased cover prices more than offsetting declines in circulation. Digital revenues grew 35.3% in the period, benefiting from increased investment committed at the start of the year. It operates 317 local websites.