US print decline to hit Future profits

15th Jul 2011 07:40

Future, the publisher of hobby magazines such as Classic Rock and Guitar World, expects its earnings before interest and taxation for the full year to be £2m less than expected after disappointing sales in the US.The poor performance has prompted the company to accelerate its transformation into a mainly digital business.Future said most recent returns of unsold magazines in the US "suggest further significant adverse adjustments to our forecasted sales."It added that print advertising revenues are continuing to decline and that a digital product launch for the second half has been delayed. Turning its US operations into a mainly print business will take about 12 to 15 months, the company said.Future reported a pre-tax profit of £1.2m in the half year to 31 March.It said today that UK sales have held up well, with circulation revenues down 3% and digital advertising growth offsetting the decline in print advertising.The publisher is to take chunky non-cash impairment charge in its 2011 results to take into account the declining value of its ailing US print business.The board anticipates one-off associated exceptional cash costs of up to £3.5m in 2011 to account for restructuring initiatives.The group's net debt at 30 June 2011 is estimated at 1.67 times bank EBITDA (EBITA plus depreciation). The group continues to operate within all bank covenants and is confident that, including the impact of the information in this statement, the group will continue to comply with all bank covenants.The share price of Future plummeted to a 52-week low on 13.5p on the news. ---RG