Indo predicts significant profits

PUBLISHING group Independent News & Media expects a double-digit rise in earnings in 2005.

In a trading update yesterday, the company said it has seen good advertising and circulation revenues growth across all its businesses.

The company said it has seen advertising growth in all five regions (Ireland, Britain, South Africa, Australia and New Zealand), with group revenue expected to be 7.5% ahead. Group circulation revenues will be 3% higher than the previous year.

Independent said 2005 will show double-digit advertising growth in Ireland and South Africa, reflecting the continuing economic success of these two countries.

It said that while the British market remains behind last year, the group continues to outperform the market there.

It said its Australian and New Zealand operation continues to show solid advertising gains across its three major divisions radio, outdoor and regional newspapers underpinned by buoyant local economies and strong commodity prices.

Chief executive Tony O'Reilly said this has been a significant year for the company with Independent outperforming many of its rivals.

"The strength and diversity of Independent's franchises in vibrant economies and the expected benefits of both our market expansion efforts and our cost efficiency measures should sustain superior earnings growth . . . in 2006," Dr O'Reilly said in a statement.

Independent said that operating costs for the year are being well managed despite increased newsprint prices.

During 2005, the company shed hundreds of jobs in a cost-cutting drive that also saw the closure of a printing plant in Dublin.

The company says its Indian associate, JPL, which publishes the largest daily newspaper, Dainik Jagran, will float on the Indian Stock Exchange in early 2006. Independent will maintain its 26% stake in the company.

Profits will be boosted by the sale of the printing plant, for around €18 million, and the €79 million gain on the sale of its stake in software company iTouch.

Though Independent is confident about its prospects for 2006, its biggest title, the Irish Independent, faces fresh competition in the form of British newspaper the Daily Mail, which has invested heavily in an Irish edition due to launch in January. Shares in Independent lost more than 3% on the Dublin market, closing at €2.40.

The shares have gained around 5% this year.

Davy Stockbrokers analyst Florence O'Donoghue said: "The group is forecasting double-digit earnings growth for 2005. It has refrained from commenting this time around as to whether full-year earnings would be in line with market expectations. However, it expects double digit earnings growth in 2005, which is not inconsistent with the consensus forecast for 2005 earnings growth of 16%."