Weak ad market to hit APN profits

Reported by AAP
Thursday, December 13, 2012
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Troubled media group APN News & Media fears its full year profit will be slashed by almost a third following a major weakening in newspaper advertising markets.

In a trading update released after the stock market closed on Thursday, the trans-Tasman media group said publishing revenue had slumped 10 per cent since June on the back of weaker ad markets.

While $25 million in cost cuts had helped offset some of the impact of the falling revenues, APN's annual earnings before interest, tax, depreciation amortisation (EBITDA) are forecast to drop 28 per cent.

The group expects its total EBITDA for calendar year 2012, before exceptional items, will fall to between $150 million and $155 million from $208.9 million in 2011.

Net profit, also before exceptional items, is also expected to drop by more than a third to $51-54 million in 2012 from $78.2 million in 2011.

APN, which owns regional newspapers and radio stations across Australia and New Zealand, said its profit result would be hit by an $8 million charge linked to its outdoor advertising joint venture with Quadrant Private Equity.

However the falls in the value of APN's newspapers has also hurt its ability to deduct interest for tax purposes, causing another $5-8 million hit.

Chief executive Brett Chenoweth said while the group's radio, outdoor advertising arm Adshel and online venture GrabOne had outperformed, its publishing business had felt the full force of the market downturn in Australia and New Zealand.

"Conditions in H2 (second half) have been more challenging than H1 (first half) with extremely short bookings and we have not seen the usual seasonal uplift in revenues," he said in a statement.

"We are proactively managing the levers within our control including cash management, product innovation, sales transformation and cost reduction.

"While these initiatives will deliver a substantial contribution, the weak advertising markets have had a negative impact on APN's publishing results in Australia and New Zealand."

The slowdown in the Queensland mining industry and drop in government advertising across the state had particularly hurt revenues at APN's Australian regional media division.

Cost cuts had not been enough to offset the declining revenues, causing the division's second half earnings to fall below those of the first six months of 2012.

In New Zealand, APN fears advertising revenues will be down nine per cent for 2012, mainly because of a decline in display and job advertisements.

However improvements had been made in recent weeks and second half EBITDA would be higher than the first.

Revenues from APN's radio division, which includes the Mix network, are also expected to rise five per cent thanks in part to better listener ratings.

APN's outdoor advertising business also continues to perform well, with EBITDA for Adshel expected to rise 25 per cent.

29/07/2014 08:30Sydney, Australia. 29 July,2014
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