INM bounces 6pc on the back of 'sturdy' half-year results
SHARES at Independent News & Media closed up 6pc yesterday after the company reported a "sturdy" set of interim results.
The company, which publishes this newspaper, reported an operating profit before exceptionals for the first six months of the year of €34.5m, down €2.3m from the same time last year.
Group revenue fell 12pc to €284.6m, due to the disposal of the London 'Independent' titles at the end of April 2010 and weak domestic demand and spending in Ireland. However, underlying group revenue declined by 5pc.
Earnings per share rose from 3.3c to 3.7c. Despite higher newsprint prices, which have increased by over 30pc, operating costs were down 4.4pc due to good cost-savings measures. The results showed that operating margins increased 80 basis points to 12.1pc.
CEO of Independent News & Media Gavin O'Reilly said trading conditions, particularly in Ireland, remained very difficult and a significant increase in Irish exports failed to translate into domestic demand.
"In what are still remarkably tough advertising and consumer markets, particularly in Ireland, the group had performed well in the first six months of 2011 to generate €50.5m in EBITDA, improve its operating margins and further reduce its net debt," he said.
Mr O'Reilly said the company had been "resolutely" focused on operating costs, while at the same time "prudently" investing in a market share strategy and digital expansion.
"Without exception, all our titles are profitable and their aggregate cash performance yielded further progress towards our stated objective of significantly deleveraging," he said.
The group's net debt at June 30 was €452m, or €91m less than it was 12 months ago.
"Our debt repayments are ahead of plan," Mr O'Reilly said -- a fact that was picked up on by most analysts yesterday.
Conor Harnett of NCB stockbrokers said: "The company looks very capable of paying down the debt and has set a target to cut it by 8.5pc to €430m by the end of the year.
"As long as there is a continuing focus on decreasing the debt, there will be an uplift there -- despite the depressed market," he said.
Mr Harnett said the ongoing free cash flow of €23m would "over time benefit the equity holders and be reflected in the share price".
He said it was also encouraging that the group gave a guidance for its full-year operating profit in the range of €78m to €83m.
"The market was encouraged by results. It was one of the best performing stocks in Europe today. The stock has been oversold dramatically in the last few weeks. It is outperforming its peers, especially in relation to ad revenue," Mr Harnett said.
Mr O'Reilly said he was not anticipating any material advertising uplift or normalisation in advertising conditions before the year end.
"General advertising conditions remain tough and volatile. Visibility has not improved since our agm in June and continuing uncertainly over the response to the eurozone debt crisis continues to constrain advertising and consumer spending," he said.
He refused to say if the company would start charging for content on its websites but said the entire market was "moving in that direction".
While he felt the worst of the recession was behind us, he would temper the enthusiasm. "The big issue for the Irish consumer is liquidity. This will require the banks to lend," he said.
On a divisional basis, the island of Ireland underlying revenues declined by 6.9pc with advertising revenues down 11.1pc and circulation down 3.3pc.
Meanwhile, South Africa reported revenues down 1.2pc on an underlying basis and circulation revenues increased by 1.0pc.
Shares in INM closed at 28.2 cent yesterday. They are up over 30pc over the course of the week.