UTV hit by difficult advertising markets as pre-tax profits fall 43%
First-half profits fall to £6.1 million on weak radio and TV advertising
UTV has reported a decline in profit as difficult conditions in the Irish market impacted its TV and radio revenues.
A “difficult” and “poor” market for radio and television advertising and the absence of any major sporting event weighed on UTV Media’s financial performance in the first half of the year, the company said yesterday.
Overall pre-tax profits fell 43 per cent to £6.1 million for the six months to the end of June, while group revenues for the period declined 10.4 per cent to £55.2 million. The company has maintained its interim dividend at 1.75 pence per share.
UTV’s Irish radio division, which includes FM104, Q102 and LMFM, saw its revenue dip by 10 per cent to £9.8 million. But the company said it was still outperforming the Irish radio market, which it estimated to have contracted as much as 15 per cent in the first half.
Operating profit in the group’s Irish radio division was £2.1 million, down from £3.1 million last year.
Its British radio division fared worse, with operating profits plunging 63 per cent to £2.5 million, partly because of a 9 per cent reduction in the size of the UK radio advertising market and partly because its TalkSport division did not enjoy the boost of a major football tournament.
Television advertising revenue fell 8 per cent to £15.3 million in the first half. The company cut operating costs in the division by 6 per cent, resulting in a television operating profit of £3.3 million, down 21 per cent.
Poor trading conditions in the Irish television market “negatively impacted” its overall television advertising revenue in the first quarter, but the positions were reversed in the second quarter when a soft market in Britain detracted from a stronger performance in Ireland.
“As expected, the first half of the year has been challenging for the group,” said UTV chief John McCann. “However, we remain confident about the prospects for growth in the second half and as we move into the 2014 World Cup year.”
Irish radio revenue slipped further in August, but is forecast to move into “healthy growth” in September, while TalkSport’s revenues are also likely to rise in the months ahead, UTV said.
Television advertising revenue has “bounced back into positive territory in the third quarter, in the order of about 11 per cent, with strong growth being achieved in the previously soft Republic of Ireland market”.
UTV added that it was continuing to restructure its new media division “as we seek to improve profitability in this area”. It recently merged its social media marketing agency, Simply Zesty, with another acquisition, Tibus Digital Agency. Revenues from the new media division were flat at £6 million, while operating profit arrived at £900,000, up from £600,000.
“We are encouraged that industry commentators continue to be positive about the remainder of 2013 and it does appear that the last months of the year will make up much of the lost ground of the early months,” said UTV chairman Richard Huntingford.
Simon McGrotty, a stock analyst at Davy Research, said UTV’s half-year figures were “slightly behind forecasts”, but he described the company’s outlook statement as “reassuring”.