IN&M revenues down 10.9% to €558m

SHARES IN Independent News & Media closed down 2 per cent in Dublin yesterday as the company indicated that its profitability could deteriorate in 2012 due largely to the continued difficult economic climate in Ireland.

IN&M yesterday reported that revenues declined by 10.9 per cent in 2011 to €558 million while its operating profit fell by 8.6 per cent to €75.5 million.

To counter the effects of these metrics on its bottom line, the company reduced its operating costs by 11.3 per cent to €482.5 million.

While IN&M recorded a profit on its trading activities, a non-cash impairment charge on intangible assets in Ireland of €87.2 million pushed it into the red.

The company closed the year with a loss of €41 million. This compared with a profit of €111.9 million in 2010.

Chief executive Gavin O’Reilly described 2011 as a “tough year” while stressing that all of its newspaper titles are profitable.

Its advertising revenue declined by 6.2 per cent while circulation earnings were 2.2 per cent lower.

In Ireland, advertising dropped by 11.2 per cent while in South Africa it was down 2.1 per cent.

In relation to the current year, Mr O’Reilly said there had been no “magical improvement” in the advertising landscape in the first three months of this year.

He said ad revenues in Ireland would decline by a “mid-single digit” figure while in South Africa it would be “flat to marginally up”.

Mr O’Reilly said the profit out-turn for 2012 “won’t be a million miles away” from last year’s number, adding that it would be “foolhardy to put a hard number out there”.

IN&M also revealed that it has amended its bank covenants and scheduled debt reductions to provide the group with “significant financial headroom”.

The company expects to refinance its May 2014 debt maturity “well in advance of that date”.

IN&M reduced its net debt by €46.8 million to €426.8 million in 2011 and said its focus remains on “further deleveraging”.

Mr O’Reilly responded to questions about a report in the Financial Times yesterday that IN&M’s biggest shareholder Denis O’Brien and Dermot Desmond, who owns 5.75 per cent of the company, were planning to oust him as chief executive at its annual meeting in June.

“Denis O’Brien has been very vocal recently . . . that he wants regime change at IN&M. It’s almost reminiscent of Mr Bush in Iraq but there we are. He’s not my biggest fan [so it] shouldn’t come as a surprise to anyone.

“We’re doing better than every other media operator in this country. All we can do is manage the business to the best of our ability.”

No comment was available from Mr O’Brien yesterday.