ITV's sales top expectations, but ad outlook uncertain

27th Jul 2011 07:09

Profits at terrestrial broadcaster ITV surged 87% in the first half ended 30 June, while sales beat expectations despite a tough World Cup comparator last year.Pre-tax profit reached £181m in the period, up from £97m the year before, as costs were significantly reduced due to the absence of the 2010 World Cup.Total external revenues rose 4% from £987m to £1,027m, ahead of analysts' estimates of £1,005m, driven by 2% growth in ITV Family net advertising revenue (NAR) growth alongside improvements in international production, the firm said.However, the firm saw a significant slowdown in advertising during the period and expressed its caution in regards to the market in the current half."While the continued recovery in the television advertising market helped Q1 of this year, the slowdown in Q2, and the uncertain advertising market outlook for H2, underlines our need to rebalance the business and become less reliant on advertising revenues," according to chief executive Adam Crozier.ITV Family NAR is expected to be down 2% in July, down 4% in August and broadly flat in September. "We expect ITV Family NAR to be slightly down in Q3 but ahead of the market."Meanwhile, earnings before interest, tax and amortisation surged 45% to £240m, from £165m previously, ahead of expectations of around £225m. The result was driven by the conversion of higher revenues into profit and the absence of World Cup costs. Adjusted earnings per share rose from 2.2p to 4.1p."We are encouraged by our progress to date and the prospects for ITV in the medium to long term, although we remain cautious about the broader economic outlook and its impact on our market," Crozier said.The company also declared an interim dividend of 0.4p per share, compared with nil the year before, but warned that the level of the final dividend will be "considered in light of second half trading and the economic outlook.""In considering the proposed dividend the Board were mindful of the volatile history of the advertising market and the need to maintain a conservative level of cover. It is our intention to adopt a progressive dividend policy taking into account the outlook for earnings per share."Net debt fell to £52m from £188m at the end of 2010.BC