Mecom plunges as it warns over its profit again

City A.M. Reporter
SHARES in Mecom plummeted yesterday after the publishing group warned that full-year core earnings are expected to be below market estimates due to weakness in its Dutch advertising revenues.

The European group, which has 1.2m subscribers and caters to the Netherlands, Denmark and Poland, said that it expects full-year earnings before interest, taxes, depreciation and amortisation (Ebitda) in the range of €85m to €95m.

Mecom, whose advertising revenue has been sliding over the past few years, is trying to streamline its business by selling units and cutting costs.

“It is the speed and severity of the fall in the Dutch market which has taken them by a little bit by surprise,” analyst Patrick Yau of Peel Hunt said. He expects Mecom’s Ebitda to be €82.5m in 2012.

Advertising revenue from the Netherlands is expected to decline 17 per cent in the first half, and the company expects this pace to continue for the rest of 2012.

Mecom expects first-half Ebitda to be about €14m lower than a year ago. It reported adjusted Ebitda of €66.1m in the same period last year, including a contribution from its Norwegian arm Edda Media.

The company sold Edda Media to local group A-pressen for 1.73bn Norwegian crowns (£184m) in December to cut debt and possibly increase investor returns.

Mecom also said it expects its performance in 2013 to be hurt by a greater-than-expected decline in advertising.

Shares in the company closed down 48 per cent yesterday at 76p.