APN shares climb on joint venture and solid results
SHARES in Australasian media company APN News & Media climbed yesterday, after the company announced a new joint venture in its outdoor advertising business and reported annual profits in line with forecasts.
APN, which has interests in outdoor advertising as well as a number of radio stations and regional newspapers in Australasia, plus the New Zealand Herald newspapers, said it was entering into a joint venture with Quadrant Private Equity to grow its outdoor advertising business in Australia, New Zealand and Asia.
In a statement, APN said the outdoor joint venture, which will retain the name APN Outdoor, will incorporate all of APN's wholly-owned outdoor businesses in Australia and New Zealand as well as its 50pc interests in Rainbow Premium Outdoor in Indonesia.
The transaction values APN Outdoor at AUS$272m (€218m) and will generate gross cash proceeds of approximately AUS$190m for APN upon completion.
APN's 50pc ownership in Adshel and Hong Kong operations stay outside the new APN Outdoor joint venture.
Company chief executive Brett Chenoweth described the venture as a "unique opportunity for APN to fast-track growth in the outdoor advertising segment".
Plans for the venture were revealed as the group, which is 30.4pc owned by Independent News & Media, said full-year earnings before interest and tax (EBIT) slipped 17pc to AUS $171m and net profit after tax (NPAT) before exceptional items was down 24pc to AUS$78m, in line with guidance. Revenue climbed 1pc to AUS$1.07bn.
Taking into account a non-cash impairment charge of AUS$159m announced last August, costs associated with restructuring and other charges, the company reported a net loss after tax of AUS$45m.
Mr Chenoweth said the company had delivered on a number of commitments made to the market, and highlighted a strong performance in the second half of the year.
"In challenging market conditions, including the impact of natural disasters, we grew revenue by 3pc in local currency terms.
"This emphasises the resilience of our assets and the product innovations that we have introduced. "Trading in the second half showed a marked improvement on the first six months."
Mr Chenoweth added a cost reduction programme had achieved savings of more than AUS$25m on an annualised basis with more to come.
"More broadly, major advances have been made in operational efficiencies and cost management across the entire group. These will be fundamental to APN's ongoing success."
The company's New Zealand Herald newspapers delivered "market leading circulation and readership growth".
"Importantly, APN's publishing assets remain highly cash generative," he claimed.
The advertising division APN Outdoor outperformed the market, with local currency revenue growing 13pc, while local currency EBIT was up 33pc.
APN closed up 1.8pc at 83.5c yesterday. The share price is up 17.6pc so far this year.