Trinity Mirror issues gloomy prognosis
Trinity Mirror has lost more than a fifth of its value after the newspaper publisher warned that its cost base would rise sharply this year.
Ad-ache: CEO Sly Bailey has advertising revenue problems
A surge in overheads would eclipse the savings it expected to make from a wide-ranging cost- cutting plan this year, the owner of the Mirror titles said.
In a gloomy prognosis for its prospects, the group said its austerity measures would be 'more than offset by general inflationary price increases'. Because of the boom on commodity markets, newspaper print costs had soared by 'in excess of 20%', it added.
The warning sent shares in Trinity Mirror down 18.25p, or 22%, to 66p.
Shares in Daily Mail and General Trust, which owns the Mail, closed 17.5p lower at 540p, while regional newspaper group Johnston Press lost 0.5p to close at 11.5p.
Investors were further unsettled by Trinity Mirror's downbeat assessment of the advertising market since the start of 2011. Excluding the Manchester-based titles Trinity recently bought from the Guardian Media Group, ad revenues fell 10% in January, including a 9% fall at its national titles and an 11% drop at its regional wing.
Britain was facing a 'volatile and slow recovery as public spending cuts and taxation increases continue to impact consumer confidence' and the jobs and property markets, it warned.
The slump in advertising revenue at Trinity, which is run by chief executive Sly Bailey, is in marked contrast to the bounce in spending currently lifting the television market. This week ITV revealed that its ad turnover had risen by 12% in the first quarter of 2011 as major companies increase marketing spending as the economy recovers.
Regional papers are heavily dependent on jobs and classified ads, which have been hit hard by the austerity cuts and the rise of internet giants such as Google.
Lorna Tilbian, an analyst at stockbroker Numis, said: 'Uncertainty remains over recruitment advertising which requires a rebound in UK blue-collar employment to show meaningful growth.'
The downbeat outlook overshadowed stronger-than-expected annual results from Trinity Mirror. Pre-tax profits grew 17% to £123.3m last year after the acquisition of Manchester Evening Post and a slate of other regional papers from GMG shored up its revenues. Operating profit at its national titles rose 3% even as revenue fell by more than 6% as Trinity Mirror stripped out costs.
The group reduced its net debt by £58.1m to £265.9m and flagged up a 'material' fall in its pension deficit to £161m.
Most watched Money videos
- Pair of rare 1980s Ford Sierra RS500 Coswotths head to auction
- How to invest to beat tax raids and make more of your money
- Aston Martin unveils new Vantage sports car capable of 202mph
- Mini unveil an electrified version of their popular Countryman
- Iconic Dodge Charger goes electric as company unveils its Daytona
- German car giant BMW has released the X2 and it has gone electric!
- Would you retire abroad for cheaper living costs?
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- Steve McQueen featured driving famous stunt car in 'The Hunter'
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- The new Volkswagen Passat - a long range PHEV that's only available as an estate
- MG unveils new MG3 - Britain's cheapest full-hybrid car
- Thames Water shareholders refuse £500m lifeline plea
- BUSINESS LIVE: Crypto fraudster SBF handed 25-year prison...
- Insurance market Lloyd's of London toasts best result 'in...
- Insurers are STILL stinging drivers by undervaluing...
- MARKET REPORT: North Sea oil producer Enquest posts loss...
- Dividend hero SAINT's manager on the best shares for...
- Spirent ditches Vivai as Keysight gatecrashes deal with...
- My blood boils when I hear critics say Waspi women should...
- Legal firm representing St James's Place customers to...
- My friends say I'm a shopaholic but I'm 34, single and...
- Disgraced crypto tycoon Sam Bankman-Fried sentenced to 25...
- Bidding war erupts for UK telecoms firm Spirent as...
- Superdry founder Julian Dunkerton ends his pursuit of the...
- No one should expect sympathy when the crypto bubble...
- Competition watchdog clears Aviva's £460m acquisition of...
- William Hill owner 888 agrees to flog assets as it...
- AO World shares surge as online retailer electronics...
- JD Sports boss fires out at Nike for failing to produce...