GMG suffers ad revenue hit but increases profits

by Daniel Farey-Jones

July 28, 2006

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GMG suffers ad revenue hit but increases profits

LONDON - Full-year pre-tax profits at Guardian Media Group were up over 20% to £66.4m, but its turnover shrank slightly due to falling advertising revenues across its national and regional newspapers.

For the financial year ended April 2 pre-tax profits grew 23.6% from £53.7m a year earlier, but turnover dropped by 0.7% to £700.3m.

The results come in a year in which GMG has made major investments in its national newspaper business with the Berliner relaunches first of The Guardian in September 2005 and then The Observer in January this year.

The latest six-month average circulation figures show The Guardian up year-on-year by 3.66% to 381,790 and The Observer up 9.48% to 487,307.

This helped Guardian Newspapers Limited to increase revenues by 1.5% to £237.4m.

However, ad revenues at GNL dropped 2.3% and the division's overall loss widened from £18.6m in the previous year to £19.3m. The loss does not include an exceptional charge of £30.3m related to investment in new printing presses.

GNL also includes the digital business Guardian Unlimited, where total revenues grew by 41%, delivering a boost to the group.

While the national titles were hit by the ad downturn, the GMG regional newspapers division, which includes the Manchester Evening News, was hit harder. Total ad revenues were down 8.4% to £105.7m, and recruitment ad revenues were down 17.8%. GMG said the division is developing a more flexible range of media options for advertisers.

Overall regional revenues were down 7% to £126.8m, leaving the group again grateful for the performance of Trader Media, the Auto Trader publisher it took full control of in 2003.

Trader Media grew its operating profits by 2.8% to £119.5m on turnover up £0.5% to £303.3m.

GMG reiterated its intention to float a minority stake in Trader Media on the London Stock Exchange during this financial year, subject to market conditions.

At its radio division, GMG said the situation looked positive and "in pure radio terms" revenue grew by 13.9% to £27.9m and operating profit grew from £1m to £2.7m.

Paul Myners, chairman of GMG, said: "These are a very satisfactory set of financial results in what have been difficult trading conditions across the media sector in general, and the national and regional press in particular."

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