Trinity profits slump but death of News of the World boosts Sunday readership

15 August 2011

Publishing

Newspaper publisher Trinity Mirror recorded a huge drop in profit in the first half of 2011, although it claimed an upswing in Sunday paper sales on the back of the closure of the <i>News of the World</i>.

According to the company's results to 3 July 2011, operating profit dropped 23.7% to £47.1m year-on-year, from £61.7m. Turnover also dropped from £382.2m to £371m, a dip of 2.9%.

It said that there were a number of reasons for the drop in profit, including cuts in public sector spending impacting advertising. It has also faced increasing consumable costs, particularly a £9m increase in its newsprint cost, despite a decrease in volume. Trinity said that it expected the prices to increase again at the end of the year.

It said it was mitigating these trends with increased cover prices and strengthening its contract printing.

According to the results, the fall in revenue ultimately contributed to operating margins falling by 3.4 percentage points from 16.1% to 12.7%

The publisher claimed that it remained cash generative, with its net debt dropping by £3.7m to £262.2m.

Trinity Mirror also stated its intention to increase its planned cost savings in 2011 to £25m, a £10m increase.

In its results, the company also said that it had undertaken a range marketing moves in July in order to capitalise on the closure of News International's News of the World title.

It said: "The early results of this activity are highly encouraging with an increase in both volume and revenue of each of our six Sunday newspaper titles, particularly so for our three national titles.

"The benefits are evident in improved group circulation revenues in July which are up 2% year-on-year with our nationals up 4%, a significant improvement from the 5.4% decline in group circulation revenues in the first half."

Despite the positive move for its nationals, regional titles continue to struggle, with a 10% drop in circulation year-on-year.

The results follow shortly after a Sunday Times article said that Trinity Mirror shareholders had called for the company to push through a merger of its regional titles. There has been speculation over recent years that a number of the larger regional publishers will go through a series of swap and merger deals in order to strengthen the titles.

The group acquired GMG Regional Media last year which helped offset an advertising revenue decline of 10.4% (-8.4% in 2010) to a 1.8% increase within its regional division.