INDEPENDENT NEWS MEDIA (INM) held its interim dividend steady for the first time in more than a decade as the firm reported a 0.5 per cent drop in pre-exceptional operating profit in the six months to June and said it was "difficult" to reliably forecast advertising sales in the second half of the year.
Having stated in June that there was no change to its guidance of "low to mid" single-digit growth in adjusted earnings per share for the full year, chief operating officer Gavin O'Reilly said INM would achieve profits in line with consensus forecasts for the year, "assuming a continuation" of first half advertising trends.
That implies a reduction of 17.5-18 per cent in adjusted earnings per share. Mr O'Reilly, who declined to provide a forecast for 2009, said trading in September and October will have an important bearing on the firm's performance. Advertising in July and August was "marginally" behind the same period last year.
INM, publisher of the Irish Independent, will provide a trading update in late October or early November. The firm saw its share price drop more than 7 per cent in Dublin in early trading but rallied to close 0.7 per cent higher at €1.43. It traded around €3.45 a year ago.
INM said the decision not to increase its interim dividend of 4.57 cent per share was a "prudent response" to unusual market conditions. INM chief Sir Anthony O'Reilly, a 28 per cent shareholder, will receive €10.75 million. His rival Denis O'Brien, who said he was alarmed at the results, will receive €9.51 million in respect of his 25 per cent stake.
There was no comment from INM on a new attack on the company from Mr O'Brien. INM has branded him a "dissident" investor and rejected each of his previous attacks. "Revenues have declined and the performance of the UK operations, in particular, seems to be in freefall. More worryingly, the state of the balance sheet has deteriorated with net debt increasing in the period by €88 million," Mr O'Brien said.
Operating profit before exceptionals in the firm's Irish unit dropped 3.9 per cent to €47 million as revenue rose 0.5 per cent to €199.3 million. A 5.9 per cent rise in Irish circulation revenues, driven by cover price increases, helped offset a 5.7 per cent drop in advertising. Significantly lower property and recruitment advertising was offset in part by strong run-of-press and retail advertising and online revenues, INM said.
Profits and revenues outside Ireland were eroded by adverse currency movements. In Australia and New Zealand, where INM owns 39.1 per cent of Sydney-based APN News Media, operating profit dropped 3.3 per cent to €82.3 million.
However, foreign exchange hedges helped increase operating profits in South Africa by 31.5 per cent rise to €26.3 million
Operating profit in the British unit, including Northern Ireland, fell 35.6 per cent to €4.7 million and revenue dropped 14.1 per cent to €115.6 million. Lower state advertising in the North and the declining property market "affected business confidence and consumer spending".
Mr O'Brien said INM should take a close look at whether the Independent and Belfast Telegraph were contributing "anything worthwhile" to the firm. Mr O'Reilly told reporters in Dublin that there were no plans to review ownership of the Independent.
Adjusted earnings per share dropped 6.3 per cent to 7.5 cent year-on-year. Basic earnings per share rose 20 per cent to 6 cent.
Revenue fell 3.7 to €780.4 million, a decline that was attributed in the main to adverse currency movements.
On a constant currency basis, revenue rose 3.7 per cent.
IN&M: half-year results
Adjusted earningsper share dropped 6.3 per cent to 7.5 cent year-on-year.
Basic earningsper share rose 20 per cent to 6 cent.
Revenuefell 3.7 to €780.4 million, a decline that was attributed in the main to adverse currency movements. On a constant currency basis, revenue rose 3.7 per cent.
Operating profitbefore exceptionals fell to €153.8 million from €154.6 million, down 0.5 per cent but 2.1 per cent higher on a constant currency basis.
