MIRROR Group Newspapers yesterday sealed its return to normality following the depredations of the Robert Maxwell era with a strong profits performance and the promise of a return to dividend payments this year.
The group, which is involved in a consortium bid for Newspaper Publishing, publisher of the Independent and the Independent on Sunday, turned a loss of pounds 88.7m in 1992 into pre-tax profits of pounds 131.9m in the 53 weeks ended 2 January. David Montgomery, its chief executive, indicated a 'modest' dividend would be paid at the half-year stage.
Stripping out exceptional factors, principally the release of provisions following the successful recovery of assets siphoned from the pension fund by Mr Maxwell, underlying trading profits were up 19 per cent to pounds 115.9m.
Strong cash flow meant that debts were cut by pounds 57m. As a result net interest payable was slashed from pounds 44.2m to pounds 29.8m. After interest and a pounds 12.8m financing charge in respect of the pension fund, pre-tax profits on ordinary activities more than doubled to pounds 73.8m.
The profits improvement was largely due to cost cutting; turnover rose by only 2 per cent to pounds 476.1m. While advertising revenues were up by 9.7 per cent, the price war that has seen the Sun cut its cover price to 20p, 7p less than the Daily Mirror, meant circulation revenues were down and promotional spend had to rise.
Indeed, the circulation of the Mirror, which accounts for around a third of group profits, dropped nearly 7 per cent to 2.55 million in the six months to January against the same period last year.
But the adoption of high technology production, consumated this week with the completion of MGN's move to Canary Wharf in London's Docklands, has sharply improved profitability and produced trading margins of 24 per cent, the highest in the industry.
Operating costs were cut by more than pounds 8m. Although the group faced higher newsprint costs, as a result of adding …