COMPANY PRESS RELEASE: Trinity Mirror, the UK’s largest newspaper publisher, is issuing a trading update in respect of the second half of the financial year ending 30th December 2001. This statement is being issued ahead of the Company’s preliminary results announcement on 28th February 2002.
During the past five months, the Group has made good progress in implementing its strategic plans and cost reduction measures outlined on 28th July. In addition, the annual investment in digital media activities has been further reduced to approximately £10 million per annum from the beginning of 2002. The Group also anticipates a fall in newsprint prices in 2002 and negotiations with suppliers are currently ongoing. These actions will help to mitigate the effects of the uncertain economic outlook and unpredictable advertising conditions, which are expected to continue into 2002.
Throughout the year there has been significant volatility in the advertising market. Since 11th September, advertising conditions have deteriorated, particularly within the Company’s national titles and those regional titles in the South East of England.
Regional newspapers – advertising revenues within the Group’s regional titles grew by 2.0% in the third quarter, with recruitment advertising growth of 8.5%. During this period, recruitment advertising in all areas other than the South East remained very strong. The South East saw a decline in recruitment advertising as employment conditions in the Thames Valley area reacted to the downturn in the high tech and IT industries. Since September, all regional businesses have seen a slowdown in the growth rate of national and local display and recruitment advertising revenues, with the areas around Heathrow and Gatwick and central London experiencing significant declines. Total regional advertising revenues in October and November declined by 2.3% and 2.9% respectively. The early outlook for December (which, in normal trading circumstances, is a difficult month to predict) indicates a continuation of the deterioration.
National newspapers – within the three UK national titles advertising revenues in August grew by 6.2% and for the first 11 days of September by over 2.0%. For the five to seven days immediately after 11th September most advertising within the national titles was removed, primarily at the request of advertisers. This resulted in a decline for the third quarter of 1.3%. This has continued into the fourth quarter, with declines of 10.1% and 20.7% in October and November respectively. The current outlook for December is similar to November. Whilst display advertising has been badly affected, classified advertising within the national titles continues to achieve year-on-year growth.
The Scottish national titles, following a reasonable performance in the third quarter with a decline in advertising revenues of only 1.9% (compared to 5.9% in the second quarter), have been similarly impacted since 11th September. October and November have produced advertising revenue declines in these businesses of 13.0% and 17.3% respectively and December is expected to deliver a decline in line with October.
In September and October all national titles saw an improvement in circulation performance. The Mirror, has seen a 2.4% (year on year) circulation decline during the six months to the end of November, compared to 3.1% in the same period in 2000. The Daily Record’s circulation during this period fell by 3.5%, compared to 5.3% in the 2000 comparable period.
Advertising revenue growth rates for the Group and regional newspapers division are stated on a pro forma basis i.e. excluding revenue from Belfast Telegraph Newspapers (sold 30th July 2000) and including Southnews revenues throughout 2000 (acquired 28th November 2000). These growth rates also exclude advertising revenue from the three Metro titles, which is estimated to increase by £2.1 m to £4.2m for the 26 weeks to 30th December 2001.