INM sees profits boosted by strong home market

Independent News & Media, the Ireland-based newspaper group run by Sir Anthony O’Reilly, on Wednesday reported a double digit rise in underlying profits helped by a strong performances in Ireland and South Africa.

The newspaper group which also owns the Independent newspaper in the UK and has titles in Australasia, saw growth across all regions. Growth was strong in the Irish market, which accounts for about 41 per cent of operating profits before minorities, where operating profits grew by 10.2 per cent.

Growth was particularly marked in South Africa, helped by a strong economy and favourable market conditions, and operating profits rose by rose by nearly 35 per cent to €41.8m.

Joe Burnell of Davy Stockbrokers in Dublin said the company’s geographic diversity had stood it in good stead. “Ireland is going well and consumer spending in Ireland is forecast to grow. The performance here is still a lot better than the UK. Growth is also strong in South Africa.”

Sir Tony, chief executive, said: “The board is confident of INM’s ability to deliver another year of superior earnings growth for 2006 in line with current market expectations,” adding that its global spread had helped its performance.

In Ireland a 10.2 per cent rise in operating profit reflected “good growth in advertising revenue, circulation gains and the full year benefits of the restructuring of its cost base in 2004”. It achieved 9.4 per cent growth in advertising revenue year-on-year, slightly ahead of the industry’s like-for-like growth of 9 per cent, helped by a buoyant new homes advertising market and a recovery in recruitment activity.

In the UK, operating profits were 11 per cent ahead of last year at €15.1m. The national division enjoyed strong advertising growth in contrast to the broader market , which was partly offset by a further decline in the “still poor “ London recruitment advertising market within the magazines division.

“After a positive start to 2005, the UK advertising market has been in decline since the second quarter. Despite this, the Independent and Independent on Sunday dramatically outperformed the market and delivered very good growth in advertising of 11.4 per cent.” The company said the Independent was capitalising on is circulation growth as a result of the change to the compact format in 2003.

Operating profits were up 30 per cent at €342.1m. Excluding a net exceptional gain of €30.5m, relating to the sale of property and of its iTouch ringtones business and restructuring and product launch costs, operating profits rose 11.4 per cent to €312m.

Pre-tax profits were up nearly 42 per cent at €272.5m on revenues which rose by 7.5 per cent to €1.61bn.

Earnings per share rose 78.1 per cent to 20.30 cents.

The group is proposing a final dividend of 7 cents per share bringing the full-year dividend to 10.75 cents , up 19.4 per cent.

Shares in INM were flat in early trade at €2.61.

At the end of last year, the group took a 26 per cent stake in Jagran Prakashan, which owns the world’s best-selling Hindi-language title, Dainik Jagran, which translates as The Truth. Asia has been a rare bright spot for the newspaper industry, with annual revenue growth of 1.5 per cent during 200 - 2004 at a time when the global market sank by a compound annual growth rate of 0.2 per cent.