Bermuda Press (Holdings) Ltd. experienced a fall in profits of around $200,000 for the first six months of the 2010 fiscal year as the company continued to cut costs.

Net income was down at $559,000 for the six months ended March 31, 2010 from $774,000 for the same period in 2009, as was revenue, dropping slightly from $16.5 million to $16.4 million.

Earnings per share declined to 40 cents for the six months ended March 31, 2010, from 56 cents over the corresponding time frame last year.

In its letter to shareholders, Bermuda Press, which owns The Royal Gazette, said the first six months of fiscal 2010 continued to be impacted by the influence of the economic slowdown in Bermuda, and while efforts were maintained to reduce overheads within the company, the decline in revenue had not been completely offset.

"Bermuda's economy has continued to soften and your company's board is monitoring and responding to the changes in local economic conditions," the letter read. "The results from the second half of the 2010 will be impacted by increased costs as a result of the Government's 2010 to 2011 budget.

"The two percent payroll tax increase, shared equally by the company and staff, and the 0.5 percent increase in foreign exchange purchase tax will affect the group as our operations are labour intensive and the materials and supplies used in manufacturing and production are imported from overseas."

In January 2010, former group controller Jonathan Howes took over the role of CEO of the company and he has been actively reviewing and working with the group's subsidiaries to improve profitability, and the board has been closely monitoring the financial performance of its subsidiaries.

"In the current year the company is taking further steps in its effort to modernise traditional print and newspaper business models," the letter continued. "The cost to modernise these businesses and develop long-term business plans is high but the board feels that responding based on appropriate long-term plans is critical to the future success and profitability of your company." Last year, the board took the decision to suspend the publication of the Mid-Ocean News. A freeze on management and staff wages, along with a reduction in the working hours of the print operations, were further examples of the difficult decisions that have been made in an effort to ensure the future profitability and stability of the group.

Meanwhile the group's print operations are under pressure from changing business and consumer practices, with outsourcing overseas, the use of electronic media and cost cutting by businesses continuing to effect profitability in the first six months of 2010. The board and CEO are working closely with the print division to refine product offerings and enhance existing products to add greater value to customers.

In conjunction with the staff wage freezes, as detailed in the letter, the board felt it was appropriate to reduce the dividend. In January 2010, the dividend to shareholders was reduced to 10 cents per share from 19 cents. The dividend is currently being paid quarterly at a rate of 10 cents per share and the board expects this rate to be maintained through the end of the year.