Independent shares shed 6% as results disappoint

Independent News & Media shares fell almost 6 per cent yesterday when the group's 2000 results disappointed the market.

Independent reported a 13 per cent rise in pre-tax profits to €155 million (£122.1 million) for the year to the end of December on turnover which was was up 15 per cent to €1.34 billion.

One analyst said the results suggested some "sluggishness" across the group in the final quarter. The group's broker, Davy, cut its current year pretax forecast by 18.5 per cent to €162 million, forecasting growth of 4 per cent this year. Davy analyst Mr Joe Burnell said this reflected slower advertising growth globally and falls in the values of some of the currencies this group earns. But Independent should perform better than most of its European peers, he added. In Dublin, the shares initially fell 15 cents to €2.70, closing at €2.69, down 16 cents on the day.

The results show the Belfast Telegraph, acquired in August for £300 million sterling (€477.8 million), contributed operating profits of €14.4 million for a five-month period. With operating margins of about 40 per cent, it is expected to be an important contributor to profits this year.

Executive chairman Dr Tony O'Reilly said the group was well positioned for further growth. But he added: "It is too early in this present year to make any forecasts, other than to observe that there is a general slowdown in the world economy and particularly in the US, which must have repercussions throughout the world. Therefore, attention to costs and the securing of economies in every way possible will be critical to our performance in the coming year." Independent's new €60 million printing facility at Citywest would ensure cost reductions in the Irish operations, according to chief executive (Ireland) Mr Gavin O'Reilly. In the UK, the London Independent is expected to break even this year after a small loss in 2000.

About new media, including online services, the Unison Internet service provider and the 49 per cent stake in iTouch, Mr O'Reilly said the group had "a modest and tightly controlled investment strategy". The operations produced turnover of €7.7 million - 0.6 per cent of group turnover but losses rose to €10 million from €2.8 million.

Independent was committed to extending its traditional brands into digital platforms, but expenditure was being rationalised, he said. The €10 million loss would be "the highest you will see against our digital exploits".

The iTouch mobile information operation was floated in London in August. Independent took an operating loss of €11.7 million on its iTouch share but got an exceptional gain of €22.3 million on reducing its stake from 70 per cent to 49 per cent at the time of flotation.

The 2000 results were below market expectations. Earnings per share before exceptional items and amortisation were up 10.5 per cent to 16.01 cents. Davy had forecast a pre-tax outcome of €162 million and earnings per share before exceptionals of 17.8 cents.

Some of the shortfall came from an unexpected write-off of deferred costs on product development before the transition to Citywest - in line with the latest accounting practice. But brokers described the overall outcome as "disappointing" and said forecasts would be cut.