Mecom Group warns on EBITDA

Northern Europe-focused publishing business Mecom Group has warned that its March and April Dutch advertising revenues will suffer a year-on-year decline of more than 20 per cent, above both its own and current market expectations, despite the rate of decline being lower than that seen in the previous two months.

The group explained that the shortfall in advertising in March caused earnings before interest, tax, depreciation, and amortisation (EBITDA) for the group to fall behind those in 2012, and that it expects April to show a further shortfall.

Shares plunged by more than a third in early trade.

"The depth of the [Dutch economic] crisis is expected to affect advertising revenues for the foreseeable future and any improvement in economic conditions and consumer confidence is not anticipated until later in the year at the earliest," Mecom warned.

"If the pattern of recent declines in advertising revenues were to continue, total Dutch revenues would fall significantly short of current market expectations.

"The group would expect to offset a proportion of advertising declines through ongoing cost reduction programmes. However, given the extent of organisational change already planned in 2013 and the speed at which any new programmes could feasibly be implemented (with meaningful impact on 2013 EBITDA), it is unlikely that the group will be able to generate material additional cost savings to mitigate revenue shortfalls of the extent indicated by current advertising trends."

The company also cautioned that to a lesser extent, anticipated revenues in its Danish operations now suggest that EBITDA in that business will be somewhat lower than previous expectations.

As such, if the adverse pressures do not see a considerable reduction from current levels, group EBITDA is likely to fall 'materially short' of current market expectations.

The share price plunged 32.84% to 56.25p by 08:55.

NR