Mecom exceeds cost-cutting plan, to meet forecasts
* Ad revenue down 18 pct in four months to end-October
* Cost savings ahead of schedule
* Shares fall 7 percent
(Adds shares, background, analyst comment)
LONDON, Nov 17 (Reuters) - European newspaper publisher Mecom (MEC.L) said it had accelerated cost cuts to allow it to meet full-year core profit expectations as advertising remains weak, sending its shares down 7 percent on Tuesday.
The UK-based company run by former Mirror Group chief David Montgomery said advertising revenue, which has been hit hard by the recession, fell 18 percent in the four months to end-October, compared with a 22 percent drop in the first half.
The advertising decline slowed in three of Mecom's four markets -- the Netherlands, Denmark and Norway -- but accelerated in Poland, which entered the downturn later.
Norwegian media group Schibsted (SBST.OL) said last week sales were softer going into the fourth quarter and there were still no clear signs of an upswing in the media business.
Mecom, which has about 300 print titles and 200 websites, said it had already saved 115 million euros ($172 million) in costs this year, more than the 100 million euros it had targeted for 2009, and was confident of cutting more costs by year-end.
"Despite continuing weakness in advertising, the improved cost reduction in the four months to Oct. 31 allows the board to reconfirm its expectation for full-year EBITDA (earnings before tax, depreciation and amortisation) in line with current market forecasts," it said in a statement.
Media analyst Jonathan Helliwell of Cazenove said the bank did not expect any significant change to its 2009 estimates, which were for flat revenue of 1.5 billion euros and EBITDA down 30 percent to 114 million euros.
"While ad trends are not turning around quite so quickly as for UK peers, this is consistent with the later timing of economic downturn in Mecom's European markets," he wrote.
Shares in Mecom -- which have more than doubled in value this year so far as the company has slashed costs, sold off assets and issued new shares to pay down its debt -- fell 7.1 percent to 161.6 pence by 0815 GMT against a flat wider market.
Mecom's net debt rose to 425 million euros at end-October from an adjusted 379 million euros at end-June, which the company said reflected seasonality in working capital and the phasing of expenses relating to its cost reductions.
Total line-for-like revenues fell 11 percent in the four-month period, compared with a 13 percent fall in the first half. Circulation revenues rose 2 percent, helped by modest cover-price increases.
(Reporting by Georgina Prodhan, editing by Will Waterman and Erica Billingham)
($1=.6685 Euro)
((georgina.prodhan@thomsonreuters.com; +4420 7542 7954; Reuters Messaging georgina.prodhan.reuters.com@reuters.net)) Keywords: MECOM/
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