British regional newspaper group Johnston Press axed its final 2008 dividend today after saying its advertising revenues in 2009 to date were down 36 per cent.
The group, which has been especially hard hit by its high exposure to local classified advertising and sectors such as employment, housing and motoring, posted 2008 results in line with forecasts, with operating profit down 28 per cent.
But it said it expected 2009 to be a very challenging year with revenues significantly below 2008 levels and only partially offset by lower costs.
Johnston launched a deeply discounted rights issue in 2008 and cost savings to prevent it breaching debt covenants following a downturn in advertising.
"We are benefiting from the full effects of the 2008 cost reduction programme with more initiatives in place which will drive further efficiencies," the group said.
"Costs for the first two months of 2009 are running 15.7 per cent down on the same period in 2008.
"The board has decided to recommend no final dividend payment. The board continues to believe that the most important use of available cash in the current environment is to reduce the group's indebtedness."
Advertising revenues were down 17 per cent in the UK in 2008 and down 23 per cent in Ireland. The group owns 12 regional newspapers in Ireland including the Tallaght Echo, the Leinster Leaderand the Kilkenny People.
Johnston said it aims to sell its Irish newspaper chain by early May and predicts more job cuts at other titles as
advertising revenue continues to deteriorate.
Group revenues in 2008 were down 12 per cent to £532 million, in line with analyst forecasts, and operating profit before non-recurring items was down 28 percent at £128 million, ahead of forecasts at 121, according to Reuters Estimates.
The group took a non-cash impairment charge of £417.5 million against publishing titles and goodwill. Its year-end net debt was £476.8 million , which would have been £41 million lower if sterling had not weakened against the euro, it said.
The £476.8 million was £214.9 million lower than last year, mainly due to proceeds from the equity fund raising.
Reuters