Shares in Independent News & Media closed unchanged at €2.29 on the Dublin market despite a 55 per cent rise in pretax profits to €189.1 million last year.
Group chief executive Sir Anthony O'Reilly predicted a further improvement in underlying profits for 2005 given strong revenue and profit growth in all operations since the start of the year.
Chief financial officer Donal Buggy said the group was targetting a 14 per cent increase in earnings for 2005 and was comfortable with the consensus forecast that profits would reach 16.1 cents per share in the year.
The group reported earnings per share before exceptionals of 14.15 cents in 2004, up 12 per cent on 2003. It declared a final dividend of 6 cent per share, bringing the total dividend for the year to 9 cent per share.
Analysts at Goodbody and IN&M'S broker Davy said the results were in line with expectations, although Merrion Capital said the performance of the Irish and British operations lagged expectations. With IN&M predicting break-even next year on the loss-making London Independent, there was criticism of the failure to stem the losses despite the high investment in the product.
"The Indo in the UK hasn't been able to leverage circulation gains into any kind of advertising gains. If you could fix that you'd have a company in great shape as opposed to a company in very good shape," said Merrion analyst Brid White. Turnover from continuing operations was up 14.2 per cent to €1.56 billion, some €410.3 million of which came from Irish operations.
With overall operating profits before exceptionals up 22.8 per cent to €285.7 million, the group operating profit margin was 17.7 per cent, up from 16.8 per cent in 2003.
Operating profit in Ireland was €82.7 million, up from €75.3 million in 2003 and driven by growth in circulation and advertising. Despite that, Ms White said the 9.8 per cent improvement in Irish operating profits was "somewhat disappointing" and raised questions about the group's capacity to achieve planned cost efficiencies.
Chief operating officer Gavin O'Reilly said IN&M will see the full impact this year and next from a recovery programme that cost 208 jobs in Dublin last year.
While most of the savings from the restructuring have been delivered, Mr O'Reilly said management would not be doing its job if it did not continue to seek further efficiencies. However, the "heavy-lifting" in relation to cost saving was already completed.
IN&M said it had no plans to shelve the broadsheet edition of the Irish Independent after the introduction last November of a six-day publishing cycle for that paper's tabloid edition.
"We would see the two formats continuing for the foreseeable future," said Ireland chief executive Vincent Crowley. "Consumers still want both formats."
IN&M was "very happy" with its investment in the loss-making Sunday Tribune in which it has a 29.9 per cent stake, Mr O'Reilly said.
Dismissing suggestions that the appointment of a senior IN&M executive Michael Roche as Sunday Tribune managing director meant IN&M controlled that paper, he said the paper's board had presented a "very clear and coherent path to profitability".
Mr O'Reilly predicted that the London Independent will break even next year as advertising improves on the back of a 23 per cent circulation increase last year.
Stating that new acquisitions were not in focus at the moment, he said the purchase of a 26 per cent stake in the Indian paper Dainik Jagran was almost complete .
