JOHNSTON Press, the Edinburgh-based publisher of the Scotsman and Yorkshire Post, saw its shares plunge 4% despite posting its first rise in operating profits for seven years on the back of cost cutting.
Total revenue at the debt-laden company for the three months to May 4 was down 15.5%, or 11.4% on a like-for-like basis when the effect of moving several newspapers from daily to weekly publication is stripped out. Poor weather hit both circulation and advertising income at its 200 titles, the company said.
Johnston Press, which cut hundreds of jobs last year, said it now expected to reduce costs by more than £20 million in 2013.
Chief executive Ashley Highfield said: "For the first time in almost seven years we are in a position to report a year-on-year increase in operating profit for the period."
Mr Highfield said earlier this year he wants to see profit growth at Johnston Press in 2013 and to see revenues stabilise.
But Johnston Press shares yesterday dropped 0.75p on the day to close at 18.25p. The fall comes after a strong period for the company's shares which have risen four-fold since Mr Highfield, a former BBC executive, took the helm in November 2011.
Earlier this year Johnston Press told staff at its Scotsman and Scotland on Sunday newspapers it wanted to cut between 20 and 30 editorial roles at the titles.
It said yesterday that reducing debt, which stood at £319.4m at the end of last year, remained a key priority.
The company said that, "provided the trading environment does not deteriorate further", it expected results for 2013 to be in line with current market expectations.
After a difficult April, which it attributed in part to the timing of Easter, Johnston Press said that in May it saw its revenue decline slow, as it had done at the start of the year.
"We would expect this to continue into the second half of the year," the company said.
Like-for-like advertising revenues were down 15.1% on last year in the quarter with display advertising down 12.7% in the 18 weeks "principally as a result of poor weather at the start of the year" as well as strong comparative figures from last year.
Classified advertising declined 16.8% "primarily due to the economic environment", with job and motors categories most affected.
Johnston Press has seen circulation revenue fall 6% year-on-year after converting five daily titles to weekly, but said the drop was 0.8% on a like-for-like basis.
"Taking into account the impact of the poor weather at the beginning of the year and the benefit of the relaunches going forward, we continue to expect year-on-year circulation revenue growth over the full year," it said.