The publisher of the Daily Mirror reported a 75% slump in annual profits today as it revealed a £12 million hit from the launch of rival The Sun on Sunday and more than £1 million in costs from the Leveson inquiry.
Trinity Mirror posted pre-tax profits of £18.9 million and said revenues fell £54.2 million to £706.5 million in the year to December 30, with nearly a quarter of the decline caused by competition from Rupert Murdoch’s new Sunday tabloid.
It axed up to 500 of its 5,800 staff last year and recently announced a net 200 more jobs will go under plans to slash costs and restructure the business to combat tough conditions.
Trinity said costs and legal fees associated with the inquiry into press standards by Lord Justice Leveson had reached around £1.5 million in 2012, although this was offset by some of the savings under its overhaul.
The group, which publishes more than 130 regional daily and weekly newspapers, with key titles including the Liverpool Echo, Manchester Evening News and Western Mail, shaved £25 million off its cost base last year and is targeting another £10 million this year.
It was able to cut its newsprint costs last year, while other actions included outsourcing its pre-press operations, reducing its newspaper sales and marketing operations and reorganising editorial and advertising teams.
Trinity said annual circulation revenues fell 7.9%, impacted by the arrival of The Sun on Sunday last February – launched following the closure of News International’s News of the World in the wake of the phone-hacking scandal.
It said circulation revenues fell by 4.4%, stripping out The Sun on Sunday effect.
Advertising revenues continued to suffer double-digit declines, falling by 10.4% in 2012.
Trinity said this had accelerated to a fall of 14% in January and February, with overall revenues down 13% at the start of the year, in part due to tough comparisons against a year earlier when revenues were boosted after the News of the World closure and before The Sun on Sunday launched.
Revenue declines have since improved, down around 7% this month, according to Trinity.
But it warned: “The trading environment is expected to remain difficult throughout 2013 with revenues expected to continue to show year-on-year declines and month-on-month volatility.
“However, the benefits of a number of our revenue driving initiatives should contribute to a reduction in the rate of decline as we move into the second half of the year.”
Shares, which have risen sharply in recent months, tumbled by 10% after the full-year figures.
Trinity’s bottom line was impacted by a £60 million writedown on the value of its specialist digital classified recruitment and property businesses.
On an underlying basis, pre-tax profits grew 7% to £98.7 million.
Under recently appointed chief executive Simon Fox – who joined in September to replace former boss Sly Bailey – Trinity is being overhauled to reduce costs and invest in growth areas, such as digital publishing.
The group is spending around £8 million this year in new technology and new digital businesses.
Trinity also recently struck a deal with the owner of the Daily Mail to take a 20% stake in a new local newspaper company, called Local World, which comprised the regional paper assets of Daily Mail & General Trust and Iliffe News & Media.