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March 3, 2011

Profit hike for Trinity Mirror thanks to GMG Regionals acquisition

By oliverluft

Trinity Mirror increased operating profits last year thanks to additional revenue brought in by the purchase of GMG Regional Media and cost savings across the regional and national newspaper business.

The publisher reported this morning that adjusted operating profits increased 17 per cent year-on-year in the 12 months to 2 January to £123.3m.

These profits including £50.9m of revenue generated by GMG Regional following Trinity Mirror’s acquisition of the business from the Guardian Media Group in March, 2010.

Trinity Mirror said the success of its purchase of GMG Regional meant it would ‘consider further regional consolidation opportunities where there is a strong financial case and a good commercial and strategic fit”.

GMG Regional, which publishes the Manchester Evening News and associated weeklies, added an additional £5.7m in operating profit to Trinity Mirror, the company said this morning as it published full-year results.

The purchase of GMG Regional led operating profit in Trinity Mirror’s regional newspaper division to increase by 44 per cent to £51.7m.

Despite this Trinity Mirror, which is the UK’s largest regional newspaper group, said 2010 had proven to be another challenging year for the sector even if some improvements were visible.

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Excluding additional income brought in by GMG Regional, Trinity Mirror said regional revenues fell by 7.5 per cent to £280.3m – in 2009 its regional revenue fell year on year by 23.5 per cent.

Including GMG Regional, Trinity’s regional division had revenue of £331.2m last year and an operating profit of £51.7m.

Advertising revenue by category, year on year, in the regional division saw display up 23.5 per cent, recruitment down two per cent, property up 11.1 per cent, motors up 8.6 per cent and other classified categories up 4.2 per cent.

Excluding GMG Regional Media, display was down one per cent, recruitment down 19.4 per cent, property down 8.6 per cent, motors down 11.6 per cent and other classified categories down 11.1 per cent.

Trinity Mirror’s national newspaper division, publisher of the Daily and Sunday Mirror, recorded operating profit growth of three per cent year on year to £86.1m from revenue of £430.3m – a decline of 6.5 per cent year on year.

Mirror Group Newspapers, Trinity’s London-based national newspaper business, reduced headcount by around 200 employees last year.

Overall revenue generated by Trinity Mirror last year was broadly the same as in the previous twelve months dipping slightly from £763.3m in 2009 to £761.5m last year.

Trinity Mirror said £351.3m revenue came from advertising, £317.4 from circulation and £92.8m from other sources.

In 2009, Trinity Mirror’s revenue was yet to benefit from ownership of GMG Regional but did increase £9.9m with additional operating profit of £4.2m because of an extra week’s trading.

Excluding the acquisition of GMG Regional, group revenue last year was down by 6.9 per cent to £710.6m. Trinity Mirror said this indicated an improvement in its fortunes as in 2009 it recorded a 12.4 per cent decline in revenue.

Trinity Mirror said its operating costs had been reduced by £64.7m in 2010 including in structural cost savings of £25m. However, once a £45.2m cost relating to the acquisition of GMG Regional was taken into account the overall reduction was £19.5m.

Sly Bailey, chief executive of Trinity Mirror, said: “We delivered a strong performance during 2010 with operating profit up 17 per cent, earnings per share up 43 per cent and debt falling by £58m.

‘Although 2010 proved to be as challenging as expected, we made good progress in rolling out our new operating model, integrating GMG Regional Media and increasing profitability and margin whilst managing extremely volatile revenue trends throughout the year.

‘Many of the challenges we faced in 2010 remain in 2011. However, our planned investment initiatives to grow revenues coupled with our focused approach to tightly managing the cost base will help support profits this year whilst positioning the Group for growth when market conditions improve.”

Trinity Mirror said net debt fell by £58.1m to £265.9m.

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