Independent News & Media reported a pre-tax loss of â‚¬48.5m in the first six months of the year with the owner of the Independent and Independent on Sunday reducing the value of its titles as advertising revenue continued to fall.
The company dropped into the red despite recording a pre-tax profit of â‚¬96.6m in the same period last year.
INM recorded a fall in advertising revenue of 19.6 per cent year on year during the first six months of 2009, circulation revenue was flat, which contributed to an overall drop in revenue of 22 per cent to â‚¬608.8m, down from â‚¬780.4m in the same period last year.
Revenue from INM’s UK operation fell 28.5 per cent to â‚¬82.6 in the first half of the year, down from â‚¬115.6m made in the same period last year.
INM’s UK business made an operating loss of â‚¬3.8m during the first half of the year – a drop of 180.9 per cent on the â‚¬4.7m profit it made in the same period in 2008.
The company confirmed late yesterday that it had agreed a fourth standstill agreement with its lenders over repayment of a â‚¬200m (£175m) bond, originally due in May, as it sought to put together a financial restructuring deal. It now has until 25 September to work out a deal.
In addition, the company said the group’s net debt was â‚¬1.3bn at the end of June.
INM said it had “sufficient funding in place to meet all working capital requirements during the standstill period.”
However, it warned that the advertising market in Ireland and the UK remained down and it therefore had to reduce the value of its titles by â‚¬71.8.
Gavin O’Reilly, chief executive of INM, said: “The group’s current forecast presumes a continuation of poor advertising markets to year-end, with no material pick up from the trend experienced in the first half, save seasonal trends in the run-up to Christmas.
“Accordingly, and dependent on no further deterioration in advertising conditions, the group forecasts operating profit before exceptionals for 2009 to be at the lower end of the range provided in June 2009 of â‚¬180 million to â‚¬210 million.”
Operating profit in the first six months of the year fell by 52.4 per cent to â‚¬73.2m, the company said.
As INM fights against declining advertising and mounting financial difficulties it has sought to reduce cost by shedding employees and selling of parts of the business.
The company reduced its staff by 900 – around 10 per cent – in the first half of the year to approximately 8,700 as it raised â‚¬22m by selling part of its stake in newspaper publisher Jagran Prakashan. It also sold its 18 per cent holding in online gaming firm Cashcade.
The company is also understood to be close to selling its South African outdoor advertising business, INM Outdoor. The company said today the disposal processes of INM Outdoor and price comparison website Verivox were continuing – the proceeds of which are expected to exceed â‚¬110 million.
In addition, INM said it expected to realise additional cost benefits in the second half of the year as a result of implementation of an office and service sharing agreement with Daily Mail & General Trust for its national titles in the UK.