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Ink stains at Johnston Press

Johnston Press struggled to offset print declines with digital growth and cost-cutting measures
August 12, 2015

Print declines stole the half-year headlines at Johnston Press (JPR). The publisher of the Chichester Observer and Eastbourne Herald posted strong digital growth once again, but falling demand for print advertising and newspapers drove underlying operating profit down 4 per cent to £27m.

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Newspaper sales slid 5 per cent, while reduced interest from property, employment and motoring advertisers meant underlying print ad revenues fell a tenth to £64m. The outlook is little better: advertising sales slumped 8 per cent in July. Perhaps the only good print news was a five-year printing contract with Express Newspapers that encompasses four titles.

Johnston Press grew its average digital audience by more than a fifth to almost 20m readers a month. That fuelled a 18 per cent rise in digital advertising revenues to £17m, or close to 21 per cent of total advertising revenues. The group also benefited from the launch of 1XL, a digital ad-exchange partnership with local media groups. Further growth could stem from upcoming products such as AdPerfect, which small businesses can use to create online adverts.

The group unearthed £7.6m in gross cost savings. After £2.6m of investment in digital initiatives, that meant underlying operating costs fell 5 per cent.

Broker Numis Securities expects pre-tax profit of £30.9m, giving EPS of 19.8p (from £29.9m and 22.3p in 2014).

JOHNSTON PRESS (JPR)
ORD PRICE:110pMARKET VALUE:£116m
TOUCH:108-115p12-MONTH HIGH:215pLOW: 100p
DIVIDEND YIELD:nilPE RATIO:96
NET ASSET VALUE:191p*NET DEBT:91%

Half-year to 4 JulTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2014†135.8-6.3-0.1nil
2015128.92.21.4nil
% change-5---

*Includes intangible assets of £515m, or 487p a share

†28 weeks to 28 June