Indo group to shift jobs to South Africa

INDEPENDENT NEWS & MEDIA (INM) is set to relocate back-office jobs from Ireland to South Africa as part of the newspaper publisher's plans to cut costs and improve profits.

The Tony O'Reilly-headed company, which yesterday reported pre-tax profits of almost €155 million, a 20% increase on the previous year, said its Irish operating margins were high but needed to be higher.

INM's Irish operations delivered margins of 19.9% and operating profits of €75.3 million last year. This compared with margins of 20.5% in Australia and New Zealand, 14.7% in South Africa and 8.6% in Britain. Chief operating officer Gavin O'Reilly said the group's restructuring programme, which was announced in December, would eliminate what he called "cost anomalies".

Mr O'Reilly spoke of a "sense of entitlement in the Irish newspaper industry that has no place in the future" and predicted over 500 job losses representing 5% of the group's staff. The group would look to consolidate certain operations in countries that made most sense, he said.

South Africa has the advantage of lower labour costs and is in a similar time zone. INM's turnover increased by 6% to almost €1.4 billion. Advertising revenues were up 5.5% and newspaper sales revenues were ahead by 6.9%, excluding currency effects.

The group's operations in Australia and New Zealand accounted for approximately half of total turnover and 55% of operating profit. INM successfully restructured its finances during the year and reduced its net debt by €245 million to €978 million. This boosted profits by €10 million by cutting the group's interest charge to €84 million. Mr O'Reilly said the financial restructuring was largely complete and that its debt burden was at an efficient level. The improved balance sheet would allow the group to borrow at cheaper rates.

The group said its decision to launch a tabloid version of the broadsheet London Independent had boosted sales. This would result in the paper halving last year's losses of €13.4 million.

The tabloid version now accounts for three-quarters of the paper's sales. Chief executive of the group's Ireland division Vincent Crowley said it was too early to comment on the success of the tabloid version.

Mr O'Reilly said the broadsheet versions of the papers would continue to be available and that INM would not try to force consumers to take a version that they may not want.