Independent’s restructuring boosts profits

INDEPENDENT News and Media’s jobcutting and restructuring programme aimed at making the company a low-cost provider in all its market is expected to boost profits this year and the years ahead.

Yesterday, company chief executive Tony O’Reilly told shareholders that the company which has media interests in Ireland, Britain, South Africa, Australia, New Zealand and India & is dedicated to being the low cost operator in all the markets in which it operates.

“Consistent with that, Independent’s stated objective is to sustain the highest operating margin of its peer group, and expects to report increased operating margins for the period.

“The expected benefits of the prior year cost reduction and re-structuring initiatives will be reflected in the Group’s full year 2005 financial performance and beyond and will more than offset additional product development costs and increased marketing,” the company said.

Next month 160 workers at the Independent owned Terenure Printers are to lose their jobs when the plant closes. And the cost base of the Irish group was substantially reduced with the axing of 208 jobs, one in four workers, in mid-2004.

“The expected benefits of the prior year cost reduction and re-structuring initiatives will be reflected in the Group’s full year 2005 financial performance and beyond and will more than offset additional product development costs and increased marketing,” the company said.

Goodbody Stockbrokers’ Niall Clifford said the group noted that it is enjoying sustainable revenue growth across all its markets and expects to record high single digit gains in advertising revenues and low single digit gains in circulation revenues for 2005.

“It also noted that it expects to achieve further operating margin improvements this year. Overall, while this is a very positive statement, the statement confirms that any prospect of an earnings upgrade, which we believe is necessary if the share price is to make significant progress, is firmly postponed until the interim stage at the earliest,” he said.

Dolmen Securities’ Stuart Draper said that despite the major circulation gains being made by the London Independent, its profitability is only improving modestly.