UBM jumps 15% as Hollick sees signs of US recovery

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The Independent Online

United Business Media yesterday said it was seeing "early signs" of a recovery in its US business as it delivered interim results well ahead of expectations.

The company's shares closed up 15 per cent on the positive news, as analysts upgraded full-year profit forecasts. The group said it was seeing improvement in all its operations - business publishing, market research and press release distribution.

Pre-tax profit was up 12 per cent at £45.5m, for the year ended 30 June, against expectations of some £30m. The performance was driven by faster than anticipated cost cutting and improved margins. It came despite a 17 per cent fall in revenues, mostly the result of currency changes, the impact of Sars and the closure of some operations.

Lord Hollick, the chief executive, said: "Although underlying revenues are down 6 per cent compared with the first half of 2002 there has been a welcome stabilisation in revenue trends over the last six months and early signs of an improvement in certain markets in the US."

Professional media profits grew by 75 per cent, thanks to a return to profit in the US, while its PR Newswire business saw a 10 per cent jump in the number of messages transmitted in the US. Margins at NOP World, the market research business, doubled.

UBM has achieved savings of £200m since 2000, which represents about 30 per cent of the cost base. Margins improved from 9 per cent last year to 12 per cent this year.

Lorna Tilbian, an analyst at Numis, said: "Margins are considerably ahead of the group's near-term target and well on the way to its 15 per cent medium-term objective." Numis raised its full-year profit forecast for 2003 by 17 per cent to £92.0m. Its 2004 figure rose 8 per cent to £113.5m.

UBM said its strong balance sheet gave it a war chest of £500m to spend on acquisitions. It said it was actively looking at possible deals.

UBM has a 35 per cent stake in Channel 5, which it has said is non-core. Yesterday UBM reported that, after six years of investment, Channel 5 delivered an operating profit in the first half of 2003.