INM advertising revenues grow for first time since 2007

Independent News & Media (INM) recorded an operating profit of €34 million in 2014, up 4 per cent on the previous year.

The group’s revenue fell 1.1 per cent to €318.7 million during the period, however advertising revenue grew for the first time since 2007.

Total advertising income climbed 0.8 per cent, while excluding the Community Telegraph in Northern Ireland, which ceased publishing at the end of 2013, advertising revenue was up 1.5 per cent.

Digital advertising revenue growth of 37.5 per cent more than offset the decline in print publishing advertising revenue.

But income from print circulation continued to fall, dropping 2 per cent.

The group recorded a restructuring charge of €9.3 million, most of which relates to the cost of redundancy schemes in its Irish operations. This was partly offset by a €3.5 million upward adjustment in the accountancy treatment of its pension schemes.

INM also recorded a €16.7 million accounting charge arising from its decision not to take part in an equity issue by the Australia and New Zealand-based media group APN last year. Its non-participation in this finance-raising exercise by APN reduced INM's stake in the company to 18.6 per cent. This interest has been valued at €131.7 million.

After all exceptional items are taken into account, the company’s pre-tax profit was €8.1 million.

"Our continuing focus on cost management remains core to ensuring the group is fit for purpose and remains competitive in a constantly evolving media environment," said INM chief executive Robert Pitt, who took up his position in October 2014.

Operating costs fell 1.7 per cent last year, despite investment on the digital side of the business. The group recently announced further cutbacks, seeking to eliminate about one in eight editorial jobs from its main operations at Talbot Street in Dublin.

Mr Pitt said the group was “still in consultation” with staff about these redundancies, but added that he was “very confident that nearly all these changes will be done through a voluntary severance arrangement”. The National Union of Journalists has expressed concern about the prospect of compulsory redundancies.

“The business is being re-organised and it’s going to continue to be re-organised as well. This is not the end of it, but it’s not just about taking costs out of the business - it’s about opening up room so we can invest in the opportunity that’s there for the future,” Mr Pitt said.

However, the group remains “firmly committed to all the titles we have in the group”, all of which are profitable, he added. “I think newspapers are going to be relevant for a very long time.”

In its outlook statement, the company said 2015 had “started well” and while noting that it was “still very early in the year”, it anticipated that its full-year performance would be in line with expectations.

Mr Pitt said the performance of the company “was obviously very encouraging for our shareholders and we think it will give them a lot of confidence”.

Independent News & Media’s share price was 18 cent as of lunchtime today, having risen 5 per cent in early trading on the Irish Stock Exchange.

The media group reduced its net debt by 6 per cent to €89.3 million, which meant its interest charges fell €14.7 million to €6 million. It also improved its operating margin by 60 basis points to 10.7 per cent.

The group publishes the Irish Independent, Sunday Independent, the Herald, Sunday World, the Belfast Telegraph and a number of other titles.

Mr Pitt reiterated that there were no plans to introduce a paywall on Independent.ie as the company believed “the best option” was to try to grow its online traffic further. The group’s total digital traffic increased 37 per cent year-on-year in 2014.

INM's operating profit and revenue beat forecasts by analysts at Davy Research, which described its performance as "strong" and "impressive overall" and said its investment in digital media "appears to be bearing fruit".