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INM reports operating profit of €75.5m and further significant paydown of debt

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Gavin O'Reilly, INM Group Chief Executive Officer. Photo: Frank McGrath

Gavin O'Reilly, INM Group Chief Executive Officer. Photo: Frank McGrath

Gavin O'Reilly, INM Group Chief Executive Officer. Photo: Frank McGrath

SALES and profits at Independent News & Media took a hit last year as poor economic conditions weighed on the figures.

However, despite the environment, the company’s Irish titles, including the Irish Independent, the Evening Herald, the Sunday World, and a number of regionals, remained profitable.

The company also managed to cut costs following significant deleveraging and net debt reduction was €46.8m, or nearly 10pc to €42.8m.

Revenues fell 10.9pc on 2010 to €558m while a loss of €63.3m was incurred as profits was reversed due mainly to impairment charges on intangible Irish assets and INM's share of the exceptional charge incurred by APN News & Media on its New Zealand mastheads.

Operating profit fell by 8.6pc to €75.5m.

Commenting on the results, Gavin O’Reilly, Group Chief Executive Officer, said: “2011 was another challenging year for our industry. Ireland’s economic prospects stabilised throughout the year but consumer demand, and spending, did not return to the domestic economy as austerity measures and the eurozone debt crisis, in particular, weighed on sentiment.

“General trading conditions in South Africa were also subdued in the year following the euphoria of that country hosting the World Cup. However, our Zulu language titles continue to make excellent gains in circulation and are attracting an increasing number of advertisers.”

Underlying advertising revenue was off 6.2pc and circulation revenue was down 2.2pc, however the group’s digital operations saw growth of almost 10pc.

INM announced that operating costs were reduced by €21.6m (11.3pc) despite significant newsprint and energy price increases outside the control of the group and investment in new and successful digital enterprises.

The company pointed out that while competitors struggle and despite the difficult macroeconomic conditions, the group has maintained, and in some cases improved, its leading market share position.

Significant and strategic investments have been made in the Group’s digital operations, it said, with underlying revenue growth of 9.6pc in 2011.

GrabOne.ie, an online coupon deals site, launched in May 2011, has expanded rapidly and is already the No. 1 Irish-owned deals site. It is operating in seven distinct geographic markets in Ireland and has the strongest social media presence across the online coupon market, the statement said.

In South Africa, INM has also made strategic investments in the deals and coupon markets where it has a 51pc stake in Vuvuplaza.com, launched in early 2011, a daily deals operator similar to GrabOne.

The Group has acquired a 49pc stake in Mypricingguru.co.za (‘MPG’) which is optimised for mobile phone platforms and offers a ‘best price on demand search portal’ linked to customer special offer alerts.

CarsIreland.ie, in which INM has a 33.3pc shareholding, showed encouraging growth and the Group launched a new Irish recruitment site, findajob.ie, in alliance with Europe’s largest online recruiter, Stepstone.

A new online editor was appointed to independent.ie and in November 2011 it became the largest online newspaper publishing site in Ireland, according to comScore Media Metrix Newspaper category report.

Net Exceptional Charges After Tax totalled €94.8m, the company said.

“Against this backdrop, the Group has delivered an EBITDA, including dividends received, of more than €102m. We have reduced our Net Debt by a further €47m, or 10pc, and have reduced underlying Operating Costs by in excess of €21m,” Mr O’Reilly added.

“We continue to maintain or improve market share and have made important investments in digital. GrabOne.ie, for example, has exceeded our expectations since launch and underlying digital revenue rose by nearly 10pc in 2011.

“Forecasting in the current climate is very difficult and, at present, advertising conditions remain challenging and erratic. There has been some encouraging trading in recent weeks, particularly in Ireland, but visibility remains short and susceptible to influence by macro-economic factors.

“INM has a strong portfolio of market-leading and profitable titles. The Group also has a well invested and increasingly efficient asset base, with no significant near-term capital expenditure requirements.

“INM is committed to continued cost vigilance and we have strong operating leverage in our business to translate any improvement in market conditions directly to our bottom line. Our focus is on maximising available cash flow for continued debt paydown, which will deliver value for our shareholders,” he said.

The Irish Daily Star Sunday, in which INM was a 50pc shareholder, and the Sunday Tribune, in which INM was a 29.9pc shareholder, ceased publication in January and February 2011 respectively.