Profit warning spooks media group investors

Shares in Johnston Press plunged in early trading yesterday after the media group issued a profits warning.

Stock in the company, which owns the Scotsman and a portfolio of regional newspaper titles in Scotland, fell by more than 16% in early trading following an update yesterday.

Investors were spooked by an admission that both half-year and fullyear profits would be impacted after advertising revenues and circulation sales fell by 5% and 5.5% respectively in the 26 weeks to July 4.

The Edinburgh-based group said advertisers chose to hold off and slash spending across print and online amid the uncertainty caused by the election.

The company said it had taken action to limit the impact, but half-year profits were still expected to come in below a year earlier, while profits over the full year would now be “slightly below” forecasts in the market.

Chief executive Ashley Highfield said: “Trading conditions in the first half of 2015 have undoubtedly been challenging, especially in the period around the general election – a time when there was also a high degree of uncertainty in the wider market.

“Whilst we expect this will have an impact on profit both at the half-year and the full year, there are positive indicators coming through with digital growth and continued strong cash flow.”

Digital revenues are expected to have jumped by around 17% in the group’s first half, while readers visiting its sites are up by more than a fifth.

The group also said there were signs of a wider pick-up in trading so far in July.

Johnston, which was originally founded in Falkirk in 1767, owns around 250 newspapers and 198 websites and has been focusing heavily on increasing its digital footprint in recent years.

Shares closed down 28.50p at 113.50.

Johnston Press chief executive Ashley Highfield.