Johnston, which publishes 18 daily and 300 weekly local UK newspapers, said on Wednesday sales fell 6.3 per cent to 293.1 million pounds ($540.9 million), missing the Reuters Estimates average forecast of 300.3 million pounds.
Operating profit fell 15.6 per cent to 81.6 million pounds and pretax fell 18.1 per cent to 62.5 million, both beating market expectations. Johnston said it had cut costs by 7.6 million pounds and would continue to actively manage costs.
"We expect to deliver a result reflective of these initiatives and the difficult market conditions," Chief Executive Tim Bowdler said after Johnston's ad revenues fell a further 21 per cent in the first seven weeks of the second half.
"Future performance will inevitably be linked to the economies of the UK and to a lesser extent that of the Republic of Ireland," he added in a statement.
Johnston took an impairment charge of 109 million pounds against the value of goodwill and publishing titles.
Fellow UK newspaper group Trinity Mirror, which publishes popular national tabloid the Daily Mirror as well as numerous regional papers, reported last month its ad sales had fallen 6 per cent in the first half and 15 per cent in July.
Johnston's exclusively local readership makes it more vulnerable to downturns in classified advertising for housing, employment and cars -- a fact reflected in its valuation of 5 times 2009 earnings, compared with the UK sector average of 8.