Trinity Mirror digs in for 2006 after revenue fall

by Daniel Farey-Jones, Brand Republic 02-Mar-06, 09:15

LONDON - Trinity Mirror is planning £15m more in cost-cutting measures this year as it revealed revenues fell by 1.3% in 2005.

Sly Bailey, Trinity Mirror chief executive, says she expects the company to have a "satisfactory" 2006 amid mounting cost pressures and a difficult advertising market.

On a like-for-like basis, revenues for 2005 were down to £1.11bn, compared with £1.13bn for 2004. Pre-tax profits, however, climbed by 5.9% to £220.9m on cost savings of £35m and margin improvement from 21.8% to 22.5%.

The company is aiming for another £15m of cost savings in 2006 while investing in its business, for which it is continuing to suspend its share buyback programme. It did not provide a figure for the number of jobs lost under the redundancy programme enacted at the end of 2005.

The cost savings were necessary, according to Bailey, to prepare for a tough year.

"The advertising market is expected to remain difficult, and we also anticipate significant cost pressure from newsprint price increases of 7%, increasing energy costs, increased labour costs and other inflationary cost increases," she said.

Last year's fall in revenue was down to the company's national and regional newspapers, and not its healthier sports, magazines and exhibitions divisions.

Its national newspapers division, including the Daily Mirror, ad revenue fell by 9.2% from £194m to £176.2m. Circulation revenues increased by 0.1% to £219.5m with cover price increases offsetting circulation declines.

The digital activities of the national division delivered a yearly profit for the first time.

At the regionals division, ad revenue fell by 2.7% from £415m to £403.7m, led down by a 14.3% fall in recruitment advertising.

The digital activities of the regionals division were built up with the acquisitions of the Hotgroup, GAAPweb, Smartnewhomes and Secsinthecity for a total of £92.7m.

On a like-for-like comparison with 2004, digital media revenue increased by 24.6% from £6.1m to £7.6m

The outgoing chairman, Sir Victor Blank, who delivered his final annual report, said: "Our industry remains challenged by changing patterns of behaviour, but we believe we have the right strategy to develop opportunities for growth both through acquisition and organically within our existing businesses."

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