Group warns of drop in earnings

INDEPENDENT NEWS Media (INM), whose shares have dropped more than 70 per cent in the past 12 months, has warned of a marked deterioration in earnings this year as a result of economic weakness in Ireland, Britain and New Zealand.

Citing increasing pressure on advertising markets and adverse currency movements, the publisher of the Irish Independent said pre-exceptional fully diluted earnings per share for 2008 were likely to fall by 20-23 per cent.

This equates with earnings in the region of 14.5 cent per share, according to INM's broker Davy.

Such figures reflect a higher number of shares in issue following the maturity of New Zealand securities last year and the purchase in an all-share deal of a 50 per cent stake in African advertiser Clear Channel Independent that INM did not already own.

INM expects a drop of 11-13 per cent in pre-exceptional operating profit for the year and a 15-17 per cent drop in net profit.

The firm said the "main downturn" in advertising during September and October was in the national brand and retail categories in its Irish and British units. The decline in these categories, which had previously been ahead year-on-year, came as weak conditions persisted in the property and recruitment categories.

While a strong revenue performance in South Africa "almost offset" weakness in Ireland and Britain, adverse movements in the value of sterling and the rand contributed to an 8 per cent drop in euro revenues in the year to date.

INM expects an 11 per cent drop in full-year revenue in euro terms, although revenue in constant currency terms is likely to be 2 per cent weaker. It expects flat operating costs in constant currency terms for the year.

INM forecast that constant currency revenue next year would be down marginally on 2008, assuming economic outlook and advertising markets do not worsen. Recent interest rate cuts and the likelihood of further cuts "will assist in halting the current economic weakness and may lead to some growth" towards the second half of 2009, it said.