Upbeat Trinity Mirror gives £250m back to investors

Trinity Mirror, the regional and national newspaper publisher, has the capacity to spend some £1bn in cash on acquisitions even after announcing plans yesterday to return £250m to shareholders through a share buyback programme.

The company also revealed that it plans to become a national player in the directories market, competing against Yellow Pages; it is also considering investing £55m in its Watford print works. The Watford upgrade would enable it to publish its three tabloid national papers - the Daily Mirror, Sunday Mirror and The People - in full colour in south England and Wales. The group already has this capacity elsewhere in the country and the Watford investment will enable Trinity's nationals to keep up with the colour printing capabilities of key rivals.

Reporting a 21 per cent jump in 2004 group profits to £209m, Sly Bailey, Trinity's chief executive for the last two years, declared that the company had been "stabilised, revitalised" and was now embarked on growth initiatives - such as the directories venture. She admitted, though, that falling circulation at the Mirror titles remains a "disappointment".

The company's shares closed up 5 per cent at 719.5p, which compares very favourably with the 390.5p price when Ms. Bailey took the helm on 3 February 2003. As well as the £250m shares buyback - over three years - the full-year dividend was hiked over 10 per cent to 20.2p.

Turnover at Trinity's stable of regional titles grew 4.6 per cent last year, on an underlying basis, to £517.7m. Operating profit was 22 per cent higher at £147.7m.

At the nationals division - which includes Trinity's Scottish "nationals", The Daily Record and the Sunday Mail - turnover grew 3.8 per cent, compared to 2003, to £510.8m - despite a 6.9 per cent circulation volume decline at the Daily Mirror. Profits were 4.7 per cent better at £89.8m. Ms. Bailey said that there had been no recent approaches for the national titles but added that she had no objection, in principle, to selling these papers. "We don't feel emotional about assets," she said

Though the group's national newspapers are often seen as weak players in their market, Ms. Bailey insisted the titles are run more efficiently than competitors, with Trinity refusing to enter into cover price wars and spend large amounts on give-aways to "rent" readers.

She said: "Our margins are significantly better than those at Associated [Newspapers]."

Associated, the national newspaper division of Daily Mail & General Trust, publisher of the Daily Mail and Mail on Sunday - which are strong circulation performers - made a very similar profit last year, of £90.3m, but on much higher turnover of £890m. Peter Williams, the finance director at DMGT, responded: "We don't mind having lower margins, as long as our papers are growing. We invest heavily in them. It's the absolute level of profit that interests us."

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