APN posts lower half-year profit due to many natural disasters
Published 19/08/2011 | 05:00
Media company APN has blamed its lower half-year profits on a host of natural disasters in Australasia.
The group, which controls the market-leading 'New Zealand Herald' among other titles in New Zealand, and a host of radio stations and local newspapers in Australia, said net profits after tax fell 46pc year on year to A$21.8m (€15.8m) on revenue that rose slightly to A$508.1m. Independent News & Media has a 31pc stake in APN.
The bottom line was hit by a number of natural disasters, which adversely affected the company's publishing business, APN said.
Multiple earthquakes in New Zealand, especially in Christchurch, and the heavy flooding in Queensland pushed consumer sentiment lower, and held back wider economic growth, the media firm added.
Company chief executive Brett Chenoweth described the six months to June 30 as "challenging" but said the group's outdoor and radio arms had a "very solid" first half. He remained optimistic for the second half of year with earnings before interest and taxes (EBIT) expected to be in line with 2010 at A$118m.
"While our publishing businesses in Australia and New Zealand have faced difficult economic conditions in their core markets, our outdoor and radio businesses have produced robust results," he said.
Revenue from outdoor was a standout performer -- up 11pc with earnings before interest and taxes (EBIT) up 80pc.
Market share growth
"The division recorded excellent market share growth in Australia while in New Zealand a combination of organic market gains and the acquisition of the Oggi billboard business has taken our market share to 25pc.
"The radio results reflect increases in audience and advertising share in Australia and New Zealand," he added.
Newspaper circulation also increased in New Zealand, and the 'New Zealand Herald' now has more than twice as many readers as any other daily newspaper. The title grew circulation for the fourth consecutive audit while the circulation of 'The Herald on Sunday' rose 2.3pc over the last 12 months.
"We have also seen tremendous progress in the digital group-buying business GrabOne," Mr Chenoweth added.
"(In contrast), our greatest challenge came from the publishing businesses in Australia and New Zealand. Consumer and business confidence in those local markets began to deteriorate late in the fourth quarter last year. The flooding in Queensland and the earthquakes in New Zealand exacerbated this general slowdown."
Davy Stockbrokers' Simon McGrotty said the results were as expected. "It is encouraging that, despite the difficult trading conditions at APN, the dividend has been maintained and is a statement of management's confidence in achieving its guidance for the full year," he said.
Meanwhile, NCB has increased its price target for INM to 40c ahead of the firm's interim results next week.
"Despite a challenging market, INM comfortably generates operating EBITDA of between €90-95m, while throwing off free cash of circa €40m to €50m annually. We maintain our 'buy' recommendation with a revised Target Price of 40c," said Conor Harnett of NCB.