APN ekes out 1H profit on asset sales, looks at quitting brandsExclusive retail site

Friday 16th August 2013

APN News & Media, the Australasian publisher of the New Zealand Herald newspaper, returned to profit in the first half of the financial year as it sold assets and clamped down on costs, and is mulling the sale of its underperforming brandsExclusive retail website.

The Sydney-based media group reported net profit of A$12.8 million, or 1.9 cents per share, in the six months ended June 30, turning from a loss of A$308.2 million, or 49.9 cents, a year earlier when the company slashed the value of its goodwill and mastheads.

Revenue rose 5 percent to A$426.6 million, with a A$31.9 million contribution from asset sales. Advertising revenue slipped 2 percent to A$330.3 million and circulation sales fell 3.6 percent to A$66.7 million. Operating cash flow sank 37 percent to A$28.9 million.

APN booked a A$20.5 million impairment charge on the goodwill of its brandsExclusive unit due to increased competition in online retail. The unit made a A$2.6 million loss on an earnings before interest, tax, depreciation and amortisation basis, despite a 30 percent pickup in sales to A$31.9 million.

"Our focus on the balance sheet requires some tough decisions and as such we have started to explore possible divestment options for brandsExclusive," chief executive Michael Miller said. "Whilst APN will consider merge and sale options we also reserve the right to retain the business if it is the best outcome for shareholders."

APN has undergone a radical overhaul this year with a board-room shakeout and new chief executive appointment when major shareholders Independent News & Media and Allan Gray Australia baulked at a planned capital raising.

Miller today said the group's cost savings plan was running ahead of budget, with its annual target lifted to A$35 million having already met the A$25 million goal.

"Our goal is to have a balance sheet that positions us to have options to pay dividends, invest for growth, or pay down debt," Miller said. "The businesses are achieving on many key metrics and I am very optimistic about our future."

The board didn't declare a dividend. The dual-listed shares were unchanged at 34 cents on the NZX, and have gained 6.3 percent this year, valuing the group at $224.9 million.

APN's Australian radio business was the pick of the units, lifting earnings 14 percent to A$27 million on a 7 percent increase in sales to A$73.2 million. The unit fattened its earnings margin to 37 percent from 35 percent a year earlier.

The New Zealand radio unit, which includes NewstalkZB, boosted earnings 27 percent to A$8.7 million on an 8 percent gain in sales to A$47.3 million, with the margin widening to 18.4 percent from 15.5 percent.

APN's New Zealand media segment, which contributes the most to revenue, eked out a 1 percent gain in EBITDA to $23 million on an 8 percent decline in sales to A$136.7 million. That increased its earnings margin to 16.8 percent from 15.3 percent.

The Australian media group, which includes a raft of regional publications, reported a 40 percent slump in earnings to A$12.7 million on a 14 percent fall in sales to A$107.8 million. The earnings margin fell to 11.8 percent form 16.9 percent.

APN's digital unit, which includes the brandsExclusive, GrabOne and iNC Network businesses, lifted sales 24 percent to A$42 million, though posted a loss of A$411,000 due to the struggling brandsExclusive unit.

BusinessDesk.co.nz

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