Independent News & Media is projecting higher advertising and circulation revenues this year and lower operating costs, the group said in a trading update yesterday.

Shares in the group closed unchanged at €2.54 on the Dublin market after chief executive Sir Anthony O'Reilly said the board expected a "meaningful improvement" in underlying profit for 2005, in line with market expectations.

"The group continues to enjoy sustainable revenue growth across each of its five primary markets, being Australia, Ireland, New Zealand, South Africa and the UK," said the statement.

Half way into its financial year, the group said it expects to report a "high" single-digit increase in advertising sales and a "low" single-digit rise in the circulation of its titles.

Forward advertising bookings in all five markets remained positive, but in Britain particularly, where the group owns the loss-making Independent and Independent on Sunday titles.

The group has increased its marketing and introduced "proactive volume and cover price initiatives".

It expects increased operating margins on the back of cost reductions that saw some 200 staff leave the group's Irish operations last year. A further 163 workers will lose their jobs after the decision last week to close Terenure Printers, the printing operation of the Sunday World.

"The expected benefits of the prior-year cost reduction and restructuring initiatives will be reflected in the group's full-year financial performance and beyond and will more than offset additional product development costs and increased marketing," said the statement.

Merrion Capital analyst Bríd White said the outlook appeared broadly positive but "the trading statement itself doesn't have a lot of detail".

She went on: "Internationally, there's pretty good growth in advertising in every region and a decent amount of margin expansion in terms of the employees they have gotten out of the business."