ITV profits surge despite advertising slump

Shares in ITV soared after it reported better than expected full-year results for 2011.

Financial market analysis and opinion for the UK investment industry

Financial market analysis and opinion for the UK investment industry

The UK’s biggest free-to-air broadcaster saw adjusted pre-tax profit rise 24 per cent to £398 million, well ahead of analyst expectations of £365 million.

Total revenue rose 4 per cent to £2.06 billion, mainly driven by non-advertising revenue (NAR), which was up 11 per cent to £922 million.

The broadcaster has significantly improved its cash position, moving from net debt of £188 million in 2010 to positive net cash of £45 million at the end of 2011, its first positive position since 2004.

This improved cash position has allowed ITV to deliver a full-year dividend of 1.6p per share, welcome relief for shareholders as it had suspended its dividend in recent years due to falling advertising revenue.

Shares in ITV are currently leading the FTSE 100, up 8.26 per cent at 87.15p at 9.50am, a gain of nearly 30 per cent since the start of 2012.

Chief executive Adam Crozier, who took over ITV in April 2010, claimed good progress was being made on the plan he introduced to turn around the ailing company.

He explained, ‘We’re now almost two years into our five-year transformation plan and our continued growth in revenue and profit – at a time when the advertising market is broadly flat – demonstrates that we’re performing in line with our strategic priorities.

‘The increase in non-advertising revenues of £93 million, driven by our studios and online businesses, is clear evidence of progress in rebalancing the company and our ability to grow new revenue streams.’

The performance in 2011 came despite ITV’s flagship shows such as The X Factor and I’m a Celebrity… suffering from declining viewer figures, although this was offset by growth in viewing figures from its digital channels, especially from shows such as The Only Way is Essex and Celebrity Juice.

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