Independent bullish on advertising and circulation

Independent News & Media has sounded a positive note about trading next year, despite what the group says is a "somewhat fickle and hesitant advertising market".

In a pre-close trading statement issued yesterday, Independent said that advertising visibility - media jargon for the likely flow of advertising - was improving while circulation revenue from the group's main titles in the Republic, Britain, South Africa, Australia and New Zealand remained very positive.

In the current year, revenue is expected to be in line with last year's €1.4 billion (£1.1 billion), although there would have been a 4 per cent increase if exchange rates were unchanged.

In the fourth quarter, circulation growth in most of the group's 200-plus titles has boosted revenue and offset the downturn in advertising revenues after September 11th. Overall, advertising revenue for the year is expected to be down just 1 per cent.

In the aftermath of the September 11th attacks, advertising revenues fell 4 per cent year-on-year but the group said advertising had shown an improvement in recent weeks. Operating profits are expected to be in line with last year's €215.6 million despite the increase in newsprint prices.

Analysts said the trading statement was in line with expectations and there was likely to be only marginal changes to existing forecasts of about €218 million pre-tax profits and adjusted earnings of 16 to 16.5 cents.

Interest charges are expected to be 25 per cent up on last year - indicating 2001 interest charges of around €90 million on net debt of around €1.5 billion.

The growth in debt and interest charges is down to the €480 million acquisition of the Belfast Telegraph and the €60 million investment in a new Irish printing press at Citywest industrial estate, outside Dublin.

But the coming year will see the balance sheet impacted positively by the recent €102 million share placing and the net €220 million that Independent is expected to receive from the restructuring of its Australian and New Zealand operations.

"The interest charge is expected to reduce significantly going forward, due to substantially reduced debt levels and lower interest rates," the group said.

Independent shares hit a three-year low of €1.52 in the immediate aftermath of the September 11th bombings. Since then, however, the shares have recovered strongly and traded up to €2.05 before falling back yesterday to €1.97.