Independent News & Media issues bullish trading update

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The Independent Online

Independent News & Media (INM), the London & Dublin-listed publishing group, issued a bullish trading update yesterday, claiming that strong sales and advertising growth would help it to increase profits by more than 10 per cent this year.

The company, which owns The Independent and The Independent on Sunday titles in the UK, said newspaper circulation revenues were set to be up more than 5 per cent over the year, while advertising revenues were on track to finish up 4 per cent compared with 2005.

The group's online operations - which include Ireland's largest property portal, Propertynews.com - showed particularly strong advertising growth, helping the group to achieve an overall operating margin of 20 per cent.

"INM's strong, diverse and sustainable media franchises - across publishing, online, radio and outdoor - continue to deliver superior performance and to differentiate the group from its peers," said Sir Anthony O'Reilly, the group's chief executive.

"Another year of advertising growth, circulation growth, active product innovation, and a low-cost ethos have combined to ensure that INM is on target to deliver double-digit earnings growth for 2006. The group is extremely well positioned for continuing strong growth for the future, in line with current market expectations," he added.

The group said it had made significant progress towards its target of becoming the lowest cost operator in its sector, in spite of increases of around 7 per cent in the price of newsprint across Europe during the year.

Overseas, the company said its new South African titles, Isolezwe and the Daily Voice, along with the Herald on Sunday in New Zealand, were continuing to see strong growth. In India, where INM owns a large stake in Jagran Prakashan, the publisher of India's largest selling newspaper, Dainik Jagran, it said profits had risen 244.3 per cent during the first half of the year.

Jagran is now looking to further capitalise on the Indian economic boom, and has recently secured eight radio licences, as well as expanded into outdoor advertising.

Commenting on the results, Tricia McEvoy, an analyst for NCB Stockbrokers, said: "Overall INM remains in good shape relative to its peers. Its share price has appreciated by around 10 per cent in the last month to our €3.00 target price. Given its consistent operational performance and double digit adjusted [earnings per share] growth, we believe that INM deserves to trade in line with the overall average of its peer group."

Last month, INM pulled out of talks to buy the Australian media group APN, in which the group already owns a 40 per cent stake. However, it said yesterday that it is continuing to consider opportunities in the Australian market. Earlier this year, the company successfully snapped up Northern Ireland's largest distributor of newspapers and magazines, Wholesale Newspaper Services, as part of its strategy to continue expansion in Ireland.

Shares in INM rose 1 per cent to close at €2.98 yesterday, giving the company a market value of €2.25bn (£1.51bn). The stock has now risen 17 per cent this year, and has been one of the best performers in its sector.

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