Trinity Mirror bounces back

The closure of the News of the World has helped boost Trinity Mirror 's national circulation revenues by 4 per cent in July; reversing a 5.4 per cent decline in the first six months of the year. But this shouldn't detract from a tough trading environment as underlying advertising revenue fell 11 per cent in the six-month period, driven by public sector advertisers cutting spend by 24 per cent.

The company's deflating top line was made worse by "significant" inflation in newsprint prices, which rose £9m in the first half and "are increasing further in the second half". To combat this, the group's cost savings target has been raised by a further £10m to £25m. Stripping out exceptional items which dented the reported figures, the margin squeeze was still severe as operating profit slumped 23 per cent to £47.1m on a modest 3 per cent decline in revenue.

Trinity Mirror also has £382m of borrowings to contend with, of which a £145m repayment is due in October and a further £69.7m next June. The company has cash on its balance sheet of £120m and potential to draw down £179m of untapped facilities, which run until June 2013. But the schedule is tight.

Numis Securities is expecting full-year adjusted EPS of 24.5p (28.6p in 2010).

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