UPDATE 1-Publisher Mecom estimates higher full-year profit
Jan 14 (Reuters) - European publishing company Mecom Group Plc estimated full-year earnings well above its previous forecast and said a slide in advertising had stabilised in the Netherlands and Denmark, sending its shares up as much as 17 percent.
Mecom, which has sold assets and cut jobs to combat falling ad revenue, reported a 12 percent drop in operating costs as the benefits of cost cutting kicked in from October.
The sale of assets also helped the publisher cut about 91 million euros ($124 million) of debt, leaving it owing 38 million euros at the end of the year.
"These (restructuring) programmes ... are expected to deliver run-rate benefits totalling at least 55 million euros ($75.09 million) per year with the significant majority of these falling in the Netherlands," Mecom said in a statement.
Mecom and rivals such as Informa PLC and UBM PLC have struggled to retain advertisers as readers flock to newer and cheaper digital media.
The company, which publishes regional newspapers such as De Gelderlander and De Stentor in the Netherlands, said it expects lower interest rates on its debt and the closure of a print plant in the Netherlands to boost earnings in 2014.
It will incur a 30 million euro charge, mainly in 2014, to complete some more restructuring.
Mecom, which owns more than 250 printed titles and 200 websites, said it was still in talks to sell Limburg Media Groep, the smaller of its two businesses in the region.
"Advertising declines have moderated modestly, and the delivery of cost savings has accelerated," said Canaccord Genuity analyst Simon Davies. He raised his price target on the stock to 150 pence from 108 pence.
Mecom shares were up 12 percent at 107.50 pence at 1216 GMT.
Numis Securities analyst Gareth Davies told Reuters that Mecom's upgraded forecast was better than what the market had expected. He increased his price target on the stock to 150 pence from 130 pence citing the company's lower debt position.
Mecom estimated earnings before interest, taxes, depreciation and amortisation (EBITDA) to be about 87 million euros ($119 million) for the year ended Dec. 31. It had earlier estimated EBITDA between 70 million euros and 80 million euros.
Advertising revenue from its largest markets, Netherlands and Denmark, declined 21 percent in 2013. Mecom said it did not expect the rate of decline in ad revenue to slow in the short-term from the rate of decline experienced in the second half of 2013.