Agora beats forecasts

Media group Agora reported upbeat quarterly profits thanks to better-than-expected sales of its flagship daily Gazeta Wyborcza, causing its shares to rise by 3.8 percent.

First-quarter net profit rose to zł.14.3 million, far above analysts' expectations of zł.9 million. This was up from zł.0.8 million a year ago, when the company was facing the costs of shutting down its short-lived second daily. Revenues rose a higher-than-expected 2.6 percent to zł.302.7 million, boosted by sales of DVDs and books sold with Gazeta Wyborcza for an additional charge.

"The results are good on all levels," said Krzysztof Kaczmarczyk, an analyst at Deutsche Bank in Warsaw. "Sales of book series were a highly visible cherry on top, but a lack of improvement on the cost side is worrying." Analysts remain concerned about Agora's long-term outlook as the company only managed to reduce its costs by 2.7 percent y-o-y. The group has implemented a cost-cutting program, but this was largely offset by investments in online operations.

"Although we cut zł.35 million from our cost base, our costs will not fall zł.35 million this year because we're investing. For example we have doubled our internet team," said Agora's chief executive, Wanda Rapaczyńska. "We expect our internet operation to more or less break even by 2008, and we're looking for small and medium acquisitions," she added. Rapaczyńska did not specify by how much Agora expects costs to fall this year. (Reuters)