Johnston Press eyeing ad growth this year

LONDON (Reuters) - Regional newspaper publisher Johnston Press (JPR.L) said it hopes to see growth in its advertising market sometime this year after seeing the rate of decline ease, sending its shares soaring on Wednesday.

The group, which has titles including the Scotsman and the Yorkshire Post, said on Wednesday first-half total advertising revenues on a like-for-like basis were down 6.3 percent, compared with an 18 percent drop in the second half of 2009.

In the first six weeks of the second half they were better still, down 3.7 percent due to growth in the property sector and digital revenues.

The improving trend, combined with cost cuts, meant the group posted its first operating profit increase since 2006, helping to send shares in the group up 12 percent in early trading.

"We don't have visibility ... so it is difficult to make a prediction but if you look at the trend graphs we're certainly getting ever closer to that break even point and hopefully it will come if not by the end of this year, early next," Finance director Stuart Paterson told reporters.

Johnston's exclusively regional portfolio had exposed it more to classified ad weakness in the last two years and it was hit hard by the economic downturn due to the drop in recruitment and property adverts.

Rival newspaper publishers Trinity Mirror (TNI.L) and Daily Mail & General Trust (DMGOa.L) said recently they had seen improving advertising trends although their regional divisions still struggled.

Analysts at Numis said they would maintain their full-year forecasts for Johnston although they still have concerns over the high levels of debt at 401 million pounds, equal to a multiple of over 4 times core earnings.

"Although Johnston remains a higher risk investment due to cyclical, structural and financial issues, further advertising recovery and tight control of costs should see value transferred from debt to equity holders and our recommendation is buy," they said.

Total revenues for the 26 weeks to July 3 were down 5.2 percent to 207.3 million pounds.

"These industry leading trends ... along with our continued focus on costs, efficiencies and debt reduction, give the board confidence, in the absence of a further deterioration in the UK economy, that the outcome for the group in 2010 will be in line with current market expectations," Chief Executive John Fry said.

(Reporting by Kate Holton; Editing by Paul Sandle and Mark Potter)