Independent sees modest profits for the first half

Independent News & Media has posted modest profit growth for the first half of the year, with solid performances in South Africa, New Zealand and Australia helping to compensate for a weaker outcome in the UK and the Republic.

The media group logged pre-tax profits of €52.4 million for the six months ending on June 30th, up 1.35 per cent on the same period of 2002.

Turnover was 3.9 per cent ahead at €659.6 million, or 8.4 per cent higher when the effect of currency fluctuations was stripped out.

Independent chief operating officer Mr Gavin O'Reilly said the company expected to meet market forecasts by delivering a "meaningful improvement" for the year as a whole.

Shares in the company gave up some of the past week's strength after the results, closing 3.5 per cent lower at €1.65 in a generally fragile Irish market.

Independent said the €315 million recapitalisation programme it launched in March was proceeding to plan, with €210 million already raised through share issues and asset disposals.

The group expects the UK Competition Commission to make a final decision over coming weeks on the proposed €88 million sale of its British newspaper titles to US media firm Gannett.

Independent has also commenced discussions on the disposal of further non-core assets but executives were reluctant yesterday to specify which holdings were up for sale.

It is thought likely, however, that the group is seeking to offload its 19 per cent stake in Portuguese newspaper publisher Lusomundo.

Mr O'Reilly said Independent's holding in cable company Chorus was also on the disposal list but did not count as a non-core asset in terms of the recapitalisation programme.

He declined to comment on any interest the group might have in the Belfast News Letter and the Derry Journal in the North, which are being sold by Trinity Mirror. Independent already owns the Belfast Telegraph, and would probably face a Competition Commission investigation if it proceeded with a bid for the Trinity assets.

"Obviously we'd be mad not to go into the data room and see what's going on," said Mr O'Reilly, before going on to underline the group's continuing commitment to the Belfast Telegraph.

First-half group operating profits came in 3.8 per cent higher at €106.6 million before exceptionals of €9.6 million relating to deferred bank costs, a restructuring at APN and Independent's 38 per cent holding in loss-making iTouch.

Across the group strength in property, retail and motoring advertising balanced against persistent weakness in recruitment and, in the case of the Republic, Government advertising.

Operating profits dipped by 1 per cent to €37.7 million in the Republic, while turnover was 2.1 per cent higher at €176.3 million. Mr O'Reilly said wholesale operations had offset challenging conditions in the Irish advertising market, which fell back by 4 per cent in the first half.

In the UK, poor advertising conditions saw operating profits drop 10 per cent to €9.2 million, with a sturdy performance from the Belfast Telegraph and Sunday Life newspapers supporting the overall result.

Independent posted operating profits of €7.9 million within its South African division, up 13.5 per cent on the back of the country's improving economy.

In Australia and New Zealand, an uptick in newspaper advertising lifted operating profits 17.4 per cent to €61.1 million.

Independent declared an interim dividend of 2.75 cents per share, up 5.4 per cent on last year.