Reach has revealed that annual profits fell by more than a quarter, as costs rose by 40% while advertising demand dropped.
The publishing group, which owns titles such as the Daily Record, Scottish Daily Express and Insider, posted underlying pre-tax profits down by 28% to £103.3m.
Underlying operating profits dropped 27% to £106.1m.
Soaring inflation, largely due to rising newsprint costs as energy bills rocketed, pushed operating costs up by around £40m during the year and hit demand from advertisers.
Reach saw advertising revenues drop 15.9% in the year to 25 December, while circulation fell 1.7%, with more damage limited by cover price increases in the second half of 2022.
Digital advertising also fell 2.7% in the second half of the year, as the wider economic outlook worsened.
Reach warned that trading remains “challenging” into 2023, with ongoing falls in advertising demand seeing digital advertising revenue down by 11.9% and print advertising off 3.6% in the year so far.
Circulation was up 1.8% since the end of last year.
“The current trading environment remains challenging and we expect this to continue in 2023, with sustained inflation and suppressed market demand for digital advertising,“ read a statement.
“Although input costs remain elevated, we are confident that our cost action plan will enable us to deliver a 5% to 6% like-for-like reduction in our operating cost base for full year 2022-23.”
Reach stated that newsprint costs were about 60% higher than in 2021 - reaching a level not seen since the global financial crisis in 2008 - sent higher by soaring energy tariffs over the year.
The group has launched a plan to cut costs by £30m this year to offset inflation and advertising pressures, revealing in January that this would see it axe 200 jobs.
At the time, Reach said that savings were being made across group support functions, supply chains and stripping out duplicated roles across editorial, leading to redundancies and a freeze being put on hiring in some areas.
Jim Mullen, chief executive of Reach, said: “We expect uncertain macroeconomic conditions to persist during 2023 but, as shown during the pandemic, we are effective at managing them, with an action plan in place to help mitigate the current headwinds.
“We will continue to invest in areas which support digital expansion, such as the US.”
Dividends will be paid, but at the same rate as last year, while all staff - including executives - will not be receiving a bonus, due to performance targets not being reached.
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