IN&M profits fall on redundancy costs

INDEPENDENT News & Media’s (IN&M) first-half profits slipped by 13% after the publisher took a €29 million charge to cover the cost of hundreds of job losses.

The company is cutting nearly 580 jobs from its newspaper titles in Ireland, Australia and Britain. More than 450 people have left and it expects the rest to go by the end of the year. IN&M is outsourcing a number of production functions including page design and sub-editing.

The company was hit with an exceptional charge of €29m in the first six months of the year and the cost for the remaining redundancies will be in the region of €16m.

IN&M chief operating officer Gavin O’Reilly said yesterday the move was not an “opportunistic” one to increase profit margins but part of a wider “business re-engineering” plan that will centralise a number of functions, such as production, procurement and customer contact into just a few locations.

Pre-tax profits in the six months to end-June were €94m. Excluding the exceptional items, IN&M recorded a 4.5% rise in first half operating profits to €154.6m as revenues 2.4% to €815.5m. Revenue growth was 4.5% when currency fluctuations are excluded.

In Ireland, Independent reported operating profits €48.9m compared to €46.7m a year earlier. Revenues were 1.4% lower at €198.3m, though this reflect the ending of contract printing at the company’s presses in Kerry.

Advertising revenues growth in the six months to end June was 10% compared to 4% for the overall market. Circulation revenues were 0.7% ahead. The company said it was expecting some ease in ad revenue growth in the coming months.

In Britain, which includes the company’s operations in the North, revenues rose 22.6% to €134.6m and operating profits increased by 16.7% to €7.3m. The increase in revenues reflects the acquisition of a newspaper distribution business and a surge in online revenues. The London Independent and the Independent on Sunday remain loss-making.

APN, its Australian subsidiary, generated operating profit of €85.1m, roughly flat year on year when currency fluctuations are excluded. Revenues fell 1.5% to €365.6m.

Independent led a private equity-backed bid to buy out the other investors in APN this year. The AUS$6.20 offer was rejected by shareholders and Mr O’Reilly said Independent would not make another bid. In South Africa, profits were ahead by 30% at €20m with revenues (excluding currency movements) rose 14.6% to €117m.