Trinity Mirror sees slow recovery

The publisher of the Daily Mirror has seen its shares fall after it revealed a drop in revenues and warned of the impact of a “slow and volatile” recovery.

Trinity Mirror, which also publishes a host of regional papers, said moves to slash costs sent underlying profits up 40% to £101.5 million in the year to January 2.

But the news was overshadowed by a drop in revenues, down 6.9% on an underlying basis to £710.6 million, and as the group admitted cost-cutting would be offset by inflation and wider economic woes. Shares in Trinity lost a fifth of their value after the results.

The group said: “The board envisages a volatile and slow recovery in the UK economy as public sector spending cuts and taxation increases continue to impact consumer confidence, unemployment and the property market.”

Trinity, which also publishes the Manchester Evening News, said it expects at least another £10 million in savings this year but warned this would be “more than offset” by inflation, with newsprint prices up more than 20%, and the need to invest.

The group has shed jobs in recent years to cut costs and confirmed it reduced headcount at the nationals arm by around 200 in the year after introducing editorial changes and out-sourcing some work.

Analysts at Numis Securities said they would downgrade forecasts for this financial year on Trinity’s gloomy outlook while media expert Alex deGroote, at Panmure Gordon, said underlying trading was worse than expected.

Trinity said the full-year revenues decline was impacted by limited cover price increases as well as the snow disruption in December.

The situation has failed to improve since the year-end, with underlying sales down 6% in January and February after advertising revenues fell 10% and circulation revenues dropped 5%.

Revenues for regionals fell by 11% and by 9% across the nationals division, which includes The Sunday Mirror and The People, as well as the Daily Record and Sunday Mail in Scotland.