INM plc results to June 2011: Revenues down 12pc, profit €34.5m
Independent News and Media today reported a 12pc fall in revenues to the end of June 2011.
Operating profit for the group- before exceptionals - was €34.5m, down €2.3m from the same time last year.
Weak domestic demand and spending in Ireland and the disposal of the London Independent titles saw revenue fall by 12.3pc to €284.6m in the first six months of 2011.
Trading conditions, particularly in Ireland, remained very difficult and a significant increase in Irish exports failed to translate into domestic demand, the media group said.
Underlying advertising revenues, which represent 40pc of group revenues, remained subdued and were down by 7.3pc and underlying circulation revenues, which represent 29pc of group revenues, fell by 2.1pc.
The Irish Daily Star Sunday, in which INM was a 50pc shareholder closed in January and the Sunday Tribune, in which INM was a 29.9pc shareholder closed in February this year.
Speaking on Morning Ireland, Vincent Crowley, Independent News and Media's Chief Operating Officer, pointed out that all of the group’s Irish titles are profitable, unlike their competitors, and no further closures were planned.
He said that the fall in the company's revenues was because people are buying newspapers less frequently due to the economic pressures and poor consumer sentiment. He said he believes that the second half of the year will continue to see the same trends, and while the situation is not getting any worse it is not getting any better either.
He pointed out that tough market conditions prevail for all media groups and that some of INM's competitors are losing money.
There is good news on the Irish economy - the rising level of exports as well as a strong agriculture industry – but it will take some time to translate that positivity into better consumer sentiment, he said.
The company said it will not pay an interim dividend for 2011 and it believes there is currently greater scope to create shareholder value by continuing to reduce its debts. It said it is targeting full-year operating profit in the range of €78-83m.
“General advertising conditions still remain tough and volatile,” Independent News & Media's group chief executive Gavin O'Reilly said. “Visibility has not improved since our AGM in June and continuing uncertainty over the response to the euro zone debt crisis continues to constrain advertising and consumer spending.”
He added that the company was not anticipating any material advertising uplift or normalisation in advertising conditions before the end of the year.
Revenues at the company's island of Ireland division fell by 10.2pc to €183m, while operating profits dropped by 23.8pc to €20.2m in what INM said continued to be very difficult markets. But it said it continued its strong ongoing cost management throughout all part of the business in spite of a major cost push on newsprint prices, which rose by 30pc.
It said that circulation revenues for the island of Ireland fell by 3.3pc on last year against a 'backdrop of a most challenging retail environment and in what continues to be an extremely competitive environment'.
INM said that revenues at its South African operations rose by 1.8pc to €101.4m while operating profits fell by 9pc to €19.1m. The South African economy saw subdued consumer spending and weaker trading conditions, which were exacerbated by numerous bank holidays and trading disruptions in the run up to and during local elections in May, the company said.
INM is targeting full-year operating profit in the range of €78 million to €83 million and INM chief financial officer Donal Buggy said he expected advertising to fall by 4 percent for 2011.
The group reduced its debt pile by €21.5m to €452.1m in the first half of 2011 and would be targeting a similar debt pay-down in the second half, Mr Buggy said.