Jan 14 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
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.