Granada beats expectations amid signs of ad recovery
LONDON - Granada has beaten analyst expectations as profits before tax, goodwill and exceptional items fell to £176m and advertising revenue for the second half of the year rose 5%, although Granada would not commit itself to predicting market conditions in 2003.
Mostly as a result of £250m in costs related to the closure of its digital television venture ITV Digital and ITV Sport, Granada's losses before tax and after goodwill and exceptional items rose to £164m from a profit last time of £46m.
Profits before tax, goodwill and exceptional items were down just over 11% to £196m, compared with analyst expectations of between £126m and £146m.
Despite beating City forecasts, Granada was down in early trading, falling 0.29% to 84.75p. Carlton was also down, falling 1.72% to 142.5p.
Granada said it was well positioned to exploit an upturn in the advertising market, but unlike its ITV partner yesterday, it would not given an outlook for the ad market in 2003. It did say that it expects advertising revenue to be up by 2% in the quarter to December.
With the 5% rise in advertising revenues in the second half, Granada was down overall on the year by 4% as a result of a 6% fall in advertising revenues in the first half.
Notwithstanding the overall fall in advertising for the year, Granada said that six out of the top 10 categories increased spend, with retail growing strongly, now up to 17% of total revenue, and automotive and entertainment witnessing significant growth on last year. In the second half, cosmetics and telecoms sectors all grew.
Total sponsorship revenue for the year was down to £19m from £23m last year, reflecting earlier falls in advertising revenue. ITV1's commercial impacts, which measures the audience watching ads, strengthened with a rise of 5% among the ABC1 market and a 12% rise among the crucial 16- to 34-year-olds in the autumn.
Granada said that its internal restructuring was well advanced and that tough cost control measures were leading it to a saving of £65m a year, which it said was well ahead of target.
Charles Allen, the Granada executive chairman, said: "At the end of the first half, I said that the ITV fightback starts now -- we've had a good first round. Second half ad revenue rose by 5%, the schedule responded to increased investment and focus and we agreed commercial terms for a merger with Carlton.
"Our content division has delivered a robust performance, achieving critical and commercial successes at home and making good progress internationally. With successes in banker shows like 'Coronation Street' and 'Emmerdale', in quality drama such as 'The Forsyte Saga' and 'A Touch of Frost' and in talked-about television like 'I'm A Celebrity' and 'Popstars: The Rivals', Granada has reinforced its creative leadership.
"We now have a clear vision for the future: one ITV company, with one management and one focus to build a stronger ITV for our viewers, advertisers and shareholders."
Granada maintained its final dividend at 1p, compared with 2p last year.
Allen reiterated the benefits of the £2.6bn merger benefits with Carlton, which he said paves the way to a fully consolidated ITV, which will be better able to compete in the multichannel world and will deliver significant benefits for ITV viewers, advertisers and shareholders.
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