United News forecasts slashed after warning

CITY ANALYSTS slashed their earnings forecasts for United News & Media yesterday when the group warned its results would be hit by economic slowdowns in the US and the UK.

In a scheduled trading statement, United said overall trading results will be lower in 1998 than expected. The company's share price finished 12p down at 511p.

"We approach 1999 with confidence ... but we are realistic about the higher than usual degree of uncertainty in the major economies," the group said.

Miller Freeman, the business services arm which is the biggest division of United, was hit this year by a slowdown in the agriculture, travel and engineering sectors, where its trade magazines derive much of their revenue. Its US operations were also buffeted by slumping demand for advertising from the hi-tech sector.

The City was also disappointed by the prospect of higher costs stemming from a tough new TV licensing regime. United has decided to renew its licence for HTV and Meridian, but not for Anglia. United can also expect to save only pounds 23m next year in licence payments, roughly half the amount expected.

ABN Amro yesterday slashed its forecasts for 1999 by more than 10 per cent. It now anticipates earnings of pounds 260m against a previous forecast of pounds 305m. Merrill Lynch cut its 1999 forecast from pounds 297.6m to pounds 262m. Most analysts now expect United to show a fall in profits for the full year, followed by a further fall in 1999.

A spokesman for United said some of Miller Freeman's difficulties were due to strength, rather than weakness, in the US economy.

"Our housing magazines have suffered because the market is running ahead. The need to advertise diminishes when housing turnover is high," he said.

United said consumer publications were still performing well. Exchange & Mart and Dalton's Weekly reached record levels of advertising revenue and boosted circulation. The Express titles had "performed well in difficult conditions."

United now has a pounds 600m war-chest for acquisitions following the disposal last month of Garban, its money broking division. The group said it would continue to identify and exploit opportunities for growth around the globe.