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Independent News & Media (INM) today reported a jump in profits for H1 2010, boosted by a slight pick-up in advertising and the sale of the loss-making London Independent titles. The group made pre-tax profits of €53.3m before once-off items, up more than 39% compared with a year earlier. Revenue rose 7.8% to €656.5m. When once-off gains are included, the pre-tax profit was €63m. No interim dividend will be paid.

Commenting on these results, Gavin O'Reilly, Group Chief Executive Officer, said: "After an extremely difficult 2009, we've had a very good start to 2010, achieving a number of important milestones in revenue growth, market share, profitability and further deleveraging. As there have been a number of changes to our asset base, it is most pleasing to note an underlying 1% increase in advertising and an improving trendline occurring in all of our markets, albeit at different speeds.

"All of our segments have contributed positively to our strong operating performance in the first half, with substantial operating leverage delivering double-digit year-on-year improvements in operating profit. That growth has delivered further reductions in Net Debt, which has reduced by €360 million since June 2009 as part of our continuing focus on deleveraging. 

"Positive year-on-year advertising trends, as well as solid performances in circulation and other revenues, have continued to improve through the opening months of the second half. Profits for H2 to date continue to be well ahead of last year. This gives us confidence for the balance of 2010, and assuming a continuation of these positives, we are targeting an improved operating performance for the year, in line with current market expectations."

Results detail

Strong interim results: delivering on expectations; Davy's Simon McGrotty comments  -- "FACTS: Independent News & Media (INM) has reported (August 27th) a strong set of interim results, bang in line with our estimates. Revenues came in at €656.5m (Davy: €650.5), representing growth of 8% year-on-year (yoy), or 1% on a like-for-like (LFL) basis. EBIT grew 29.2% to €94.6m (Davy: €94.1m) or 12.7% LFL. The group reported EPS of 5.4c (Davy: 2.9c), well ahead of our forecasts; this was driven by a net positive exceptional of €9.7m, representing a gain on the disposal of its 7.8% stake in Jagran Prakashan Limited in March. Net debt has reduced to €978.5m, of which €510.6m is in recourse to INM. This marks a reduction of €63.4m in recourse net debt during the period.

ANALYSIS: By division, island of Ireland revenues declined by 2.9% (-3.3% LFL) to €204.1m, on the back of declines in circulation and a 12.6% decline in advertising revenue. Operating profit in the division increased by 1% (+0.1% LFL) to €26.5m. While earnings growth here is marginal, its does mark a turning point for the group and provides evidence that earnings have stabilised in what has been a very difficult market.

In South Africa, revenue declined by 2.8% (-2% LFL) to €99.6m, driven by a 2.2% decline in ad revenues and circulation revenues which were down 2.1%. The division also reported operating profit growth of 1% (+12.9% LFL) to €21m, helped by a 5.2% reduction in operating costs against inflation which grew by 6%.

Results from Australia were well flagged with APN having reported H1 numbers last week. Revenue grew 27% (+5.4% LFL), driven by a recovery in publishing and radio in particular. EBIT came in at €57.8m, up 40.6% yoy (+19.4% LFL).

The group's UK division, representing its former London Independent titles, was disposed of at the end of April and therefore only accounts for four months trading. This division had a first half operating loss of €5.2m on revenue of €20.8m. The disposal of this loss-making asset is welcome and now ensures that all the group's divisions contribute positively to earnings.

The outlook statement, while brief, does note continued positive momentum from the first half into H2 in terms of advertising trends, circulation and other revenues. A continuation of these trends leaves INM well place to achieve its stated objectives for an increase in full-year profitability

DAVY VIEW: These results contain a number of positives. Firstly, while revenues grew in aggregate, there are signs of stabilisation in the decline of advertising rates in both Ireland and South Africa. Secondly, the group is benefiting from the successful implementation of its cost reduction plans, which have ensured LFL earnings growth in all divisions. Finally, management has proven its ability to deliver on guidance both operationally and in terms of debt reduction.

Given the positive momentum resulting from tight cost management in particular, we are likely to upgrade our 2010 EBITDA forecast by c.€10m to €262 (a 4% upgrade). We reiterate our 'outperform' rating on the stock."

Jonathan Cavenagh, currency strategist at Westpac Bank, says a more dovish sentiment from Bernanke can certainly weigh on the dollar. He discusses the majors ahead of a key speech by the Fed chief, with guest host Yuwa Hedrick-Wong of MasterCard Worldwide and CNBC's Martin Soong and Sri Jegarajah:

Economic View: Short-term relief on debt, but yields remain too high; Goodbody's chief economist, Dermot O’Leary, comments - - "Irish Treasury Bill auctions don’t normally get a lot of attention in Ireland, never mind internationally but these are not normal times. After the movements in the Irish debt market over the past month and the S&P downgrade earlier in the week, yesterday’s Treasury Bill auction provided the latest gauge of appetite for Irish paper. Given what has gone before, the auctions provided some short-term relief, given that yields fell relative to the previous auction and demand was higher (bid/cover on the February 2011 paper was 10.1 for example).

It is far from the stage where we can be popping the champagne corks though. While yields were down relative to the August 12th auction, they are still up relative to July and substantially ahead of their German equivalents. For example, 4-month paper was sold at an average yield of 1.98%, relative to 2.46% at the previous auction, but 1.8% in July. The equivalent German paper is yielding only 0.35%. Given that Ireland is already fully-funding up to the second quarter of 2011, this is a disappointing result. The sensible pre-funding that the NTMA has done over the past two years is something that should provide some relief, but as the end of the bank guarantee approaches in little over a month, the market is fretting about other things."

Auction response unaffected by downgrade: divergent monetary trends in the Eurozone and UK; Davy's Aidan Corcoran commented - - "The yield on Irish government short-term debt issued yesterday was significantly lower than two weeks ago, despite the downgrade on Tuesday by ratings agency Standard & Poor's. The yield on six-month debt fell to 1.98%, down 48bps, while the eight-month bills fell 46bps to 2.35%. Demand was strong, at six times the €600m euro allotment.

Ten-year bonds had a less successful day, with the spread over German bunds remaining high, at 344bps. More information on the extent of bad debts in the banking system may be needed to rein this in.

According to the ECB's monthly 'Monetary developments in the euro area' publication yesterday, loans to the private sector increased 0.9% in the year to July, up from 0.5% in the year to June. The ECB officially considers broad money as an indicator of inflationary pressures, in stark contrast to the Fed, which no longer publishes data for M3. The positive but benign rate of broad money growth accords with recent positive euro-zone indicators, without raising concerns about inflation. A decrease in narrow money balances, meanwhile, suggests that banks are willing to hold less cash than at this time last year, consistent with some easing of bank liquidity fears.

The contrast to the UK is striking. There, the low rate of broad money growth has led policy makers at the Bank of England to cite a possible credit squeeze as one reason for extending loose policy. The consumer has taken little notice of the squeeze, with UK retail sales volumes hitting a more-than-two-year high in August, according to the Confederation of British Industry yesterday. Orders were similarly impressive, suggesting that the British consumer is as yet unfazed by the coming fiscal squeeze. How long this can continue is an open question."

Insight on the markets and the rising risk of a double-dip, with Mohamed El-Erian, PIMCO:

Aer Arann: Aer Lingus today said it notes Aer Arann’s decision to make an application for the appointment of an Examiner and welcomes today’s announcement that it intends to operate normally during the period of examinership.

Aer Lingus said it would like to confirm that its franchise agreement with Aer Arann remains in place and notes that this agreement has proven beneficial for both companies.

Aer Lingus Regional flights, operated by Aer Arann, will continue to operate normally and customers who hold bookings on these flights need not be concerned as there will be no disruption in service.

Aer Lingus said customers can continue to book these flights on aerlingus.com.

US Markets

On Thursday in New York, the Dow Jones dipped 74 points or 0.74% to 9,986.

The S&P 500 fell 0.77% and the Nasdaq dropped 1.07%.

Asia Markets

The MSCI Asia-Pacific index rose 0.3% on Friday, having reversed an earlier loss of as much as 0.4% on optimism over corporate earnings and as Japan pledged “appropriate” action to curb the yen’s rise.

The Nikkei added 0.95%; China's Shanghai Composite rose 0.28%; Australia's S&P/ASX 200 Index climbed 0.32% and India's Sensex Index fell 0.31%.

Asia benchmarks

In Europe, the Dow Jones Stoxx 600 fell 0.35% Friday.

The ISEQ has declined 0.13% in Dublin.

No move in CRH; AIB is off 0.52% and BoI has dropped 2.02%.

Companies reporting: INM is up 3.01%; ICG has added 0.51% and Blackrock International is up 10% to 2 cent.

Ferries group Irish Continental today reported pre-tax profits of €8.2m for H1 2010, up from €5.8m a year earlier, helped by a strong increase in passenger numbers.

Passenger numbers grew by 12% to 695,700, with the disruption caused to air traffic by Iceland's erupting volcano, in April and May.

Goodbody's Dan Cavanagh commented - - "ICG this morning reported its H110 results, which were ahead of our forecasts, the key points of which were: (i) revenue of €122m (up 2.2% yoy and broadly in line with our forecasts of €123m), as strength in the passenger traffic mitigated the continuing difficulties in the freight operations. At a divisional level, revenue from the Ferry division was €68m (up 4%and vs. our expectations of €66m), while the Freight division outturn was €55m (flat yoy / vs. forecasts of €56m); (ii) EBITDAe was €20m (up 6.4% yoy and ahead of our forecast of €19m); (iii) Operating profit (EBIT) was €8.8m (vs. €7.1m yoy and compared to our forecast of €7.4m), aided by a slightly lower depreciation charge; and (iv) net debt was €32.9m (compared to €48.5m and €21.7m at H109 and FY09, respectively), which was behind of our expectations of €25.7m.

Following 18 months of declining volumes, with freight traffic taking the brunt (RoRo -19% / Containers -26% in FY09), a degree of stability was seen during H110. This moderation can be taken as a positive and, with access to the most advantageous sailing slots and robust operating leverage, ICG is well positioned to benefit from an upturn in the Irish economy. In its commentary, management remain 'cautious on the economic prospects for the second half of the year'. With the interim outturn modestly ahead of our expectations and with H1 being seasonally less important (c.35% of EBITDA), at first glance, and subject to discussions with management, changes to our forecasts are most likely to be modest in nature."

Results detail

Property company Blackrock International Land has reported a pre-tax loss of €7.9m for the first six months of the year, compared with a €3.6m loss a year earlier.

Results detail

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