APN first-half profit falls on decline in NZ sales

Tuesday 12th August 2008

APN News & Media, publisher of The New Zealand Herald newspaper, said first-half profit fell 0.7% as a weakening New Zealand economy spurred advertisers to cut spending.

Profit was A$71.9 million in the six months ended June 30, from A$72.5 million a year earlier, the Sydney-based company said in a statement today. Pretax earnings in New Zealand fell 10% to A$42 million.

"Our New Zealand businesses have been affected throughout the period of the economic slowdown, with a number of our major advertisers cutting back advertising plans," chief executive Brendan Hopkins said.

New Zealand's economy probably shrank in the first half of the year amid a slump in consumer confidence and waning corporate profits. In Australia, the central bank has kept its key interest rate at a 12-year high 7.25% to quell inflation. The bank yesterday said economic growth will be "fairly slow in the period ahead," giving it room to cut borrowing costs.

To help stoke returns, APN announced it has acquired Media1, New Zealand's third-largest outdoor advertising business. No price was given for the purchase, which will add 130 sites to the company's 500 billboard sites in New Zealand. Outdoor advertising sales rose 14% to A$127 million in the first half, APN said.

Total trading revenue across the group rose 2.5% to A$624.5 million, it said. Full-year profit may match analysts' consensus forecast of A$162 million provided there is no further deterioration in New Zealand. The company typically makes 33% of EBIT in its final quarter.

APN will pay a first-half dividend of 10.5 Australian cents a share, unchanged from a year earlier.

"These are a good set of results against the background of the global credit crisis," Hopkins said.

Shares of APN traded on the ASX have handed investors a 33% loss in the past 12 months.

By Jonathan Underhill

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