Publisher saw pre-tax earnings increase to £35m during first half of the year, which fuelled a 23% rise in its share price
Trinity Mirror has raised its profit forecast for 2012 after reporting a rise of more than 20% in pre-tax earnings to £35m in the first half of the year, fuelling a 23% rise in the beleaguered publisher’s share price on Thursday.
The company, which publishes the Daily Mirror, Sunday Mirror, the People and more than 100 regional papers, reported a 21% year-on-year rise in pre-tax profits to £35.1m for the 26 weeks to 1 July.
Trinity Mirror said that continued cost-cutting – the target for 2012 has been raised from £15m to £20m – and a fall in newsprint prices will help it to a better than expected profit performance this year.
The positive financial performance boosted Trinity Mirror’s share price by 23%, about 7p, in early trading on Thursday to 38p, as investors warmed to the better than expected results and outlook.
The company said: “Although the trading environment is expected to remain difficult, the board anticipates that through strong operational management and the benefit of a fall in newsprint prices for the second half, we will deliver an outcome for 2012 which will be ahead of current expectations.”
Total revenues fell 4% year-on-year to £356m. Advertising revenues declined 10.5% to £151m, while circulation income remained resilient and was down just 0.6% year-on-year to £153.8m.
However, the publisher also admitted that the impact of the launch of the Sunday edition of the Sun at the end of February hit circulation revenues. Total circulation revenues actually climbed 3.1% in the first quarter, but fell by 4.3% in the second quarter.
The impact of the launch of the Sunday edition of the Sun on circulation income in the national division was stark: 5% year-on-year growth in the first quarter turned into 4.4% decline in the second.
Trinity Mirror’s national newspaper operation increased operating profits by almost 12% year-on-year to £41.6m.
This figure has been boosted by a restructure that means £3.4m of profits from the publisher’s Scottish operation, including the Daily Record and the Sunday Mail, was included in the national division figure.
Stripping this out, the national division increased profits by £1m year-on-year.
Revenue at the national newspaper division declined by 1.3% to £216.9m. However, this also includes a £14.9m boost from the Scottish operation.
National advertising revenues fell 8.2% year-on-year to £63.4m, while circulation revenues climbed 0.3% to £121.9m.
The advertising trend for the national division across the year has shown improvement, a year-on-year fall of 9.4% in the first three months of 2012 improving to a drop of 6.8% in the second quarter.
Trinity Mirror said that the diamond jubilee and the Euro 2012 football tournament helped limit national advertising decline in June by 1.4%.
Digital revenues at the national division rose 12.5% year on year – the amount was not published – following the relaunch of Mirror.co.uk.
The company said that later in the summer it intends to launch the first paid-for e-editions of the Daily Mirror and the Daily Record on tablet devices. On Thursday the Daily Mirror launched a new iPhone app.
Trinity Mirror’s regional newspaper operation reported a 12.7% year-on-year increase in operating profit to £16.9m. But total regional revenues fell by 8% to £139m.
Advertising revenues declined 12% year on year to £87.7m – an 11.7% fall in the first quarter increasing to 12.6% in the second quarter – and circulation income shrank 3.9% to £31.9m.
“Our regionals division has seen challenging trading conditions in our key large northern metropolitan markets, which are feeling the brunt of the tough economic conditions and in addition the public-sector spending cuts and continuing media fragmentation,” the company said.
Digital revenue in the regional division grew by 8.4% year on year, driven by strong digital display advertising and the acquisition of email and mobile firm Communicator Corp in January. Excluding Communicator Corp, digital revenues actually fell by 3%.
Net debt fell by £40.3m to £180.9m, leaving the company leveraged at just 1.3 times earnings before interest, tax, depreciation and amortisation. Trinity Mirror’s pension deficit fell by £20.2m to £209.9m.
Trinity Mirror chairman David Grigson said that the search for a new chief executive to replace Sly Bailey was “progressing well”.
The hunt is being led by Egon Zehnder with Vijay Vaghela, finance director, and Mark Hollinshead, the managing director of the national newspaper operation, considered to be the front runners for the role.
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