Upbeat INM targets growth in its operating profit for 2010
Media group poised to turn corner after debt revamp and sale of London titles
INDEPENDENT News & Media (INM) is poised to turn a corner this year amid signs of life in the advertising market and after successfully refinancing its debts. The sale of the London-based 'Independent' and 'Independent on Sunday' newspapers is also now imminent.
INM, which publishes this newspaper, said operating profits amounted to €177.2m last year.
Chief executive Gavin O'Reilly said yesterday the company remains highly profitable with profitability stabilising in the second half of last year. Despite poor advertising conditions, some markets are already showing year-on-year operating profit growth in 2010.
"While it is still very early in the year, if these current trends continue we would target an improvement in operating profit for 2010," Mr O'Reilly.
"It does not look too Herculean a task to see even the most modest of economic recoveries delivering a pretty compelling return for our shareholders." The company would resume dividend payments in the medium term, he added.
Shares in the company soared as much as 14pc during trading in Dublin to hit a three-month high of 10.5c during heavy trading.
"Overall, we view these results as reassuring," said Killian Murphy, analyst at Goodbody Stockbrokers, who rates the shares an 'add'.
The media group said it was expecting an operating profit this year as improving trends continued into the start of 2010.
Independent Newspapers have seen increased market share and strong circulation in many countries as readers follow the global credit crisis.
Events such as the FIFA World Cup in South Africa and the Rugby World Cup in New Zealand the following year are likely to boost demand for newspapers in some of the group's main markets.
The publisher sold some units last year as part of a €150m disposal plan that included the sale of a South African outdoor advertising unit to reduce the company's total debts by 20pc.
In November, the company moved to end fears about repayments to bond holders when it signed four-and-a-half year bank facilities, extending the group's debt maturity profile from 2010 to 2014.
Following INM's recent stake sale in Indian publisher Jagran Prakashan Ltd, INM's total recourse debt is now reduced to just over €530m on a proforma basis.
Costs were slashed by 9.1pc or €107.6m. "Vigilant cost management and further debt reduction will remain priorities," Mr O'Reilly said.
The market in Ireland "is still tough", Mr O'Reilly said, adding that he expected "mid-single digit" falls in advertising revenue in the country this year.
Still, he noted that advertising and underlying profitability in each of the group's geographic regions stabilised in the second half of 2009 and that trend had continued into 2010.
Mr O'Reilly said the sale of INM's London-based 'Independent' newspaper and 'Independent on Sunday' newspaper was "imminent" and would help the company to enhance earnings and focus on profitable markets.
Russian billionaire Alexander Lebedev, owner of London's 'Evening Standard' newspaper, and INM entered an exclusive non-binding agreement about the papers late last year.
Selling the London newspapers would allow the group to focus on more profitable markets, such as Northern Ireland and Ireland, New Zealand and South Africa, Mr O'Reilly added.
Independent shares closed up 16.3pc at 10c yesterday.