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APN News & Media expects to increase profits as much as 10 per cent for the year to December 30, despite lagging earnings from its New Zealand publishing arm.
The media company that counts the Herald and the Herald on Sunday among its assets yesterday announced an interim
net profit of A$73.2 million ($84 million) for the six months to June 30.
Chief executive Brendan Hopkins said the 5 per cent increase in profit was "solid" despite trading conditions in New Zealand being "subdued".
APN shares fell 25c on the NZX yesterday to close at $6.35.
On the Australian Stock Exchange shares fell A14c to A$5.55.
Hopkins said rising interest rates were hampering results from New Zealand, although recent restructuring would mitigate the effects.
New Zealand accounted for 49 per cent of the company's sales in 2006. Australia represented 46 per cent and Asia made up the rest.
Hopkins predicted that APN News & Media's growth would speed up in the second half of the year.
"We see the second half accelerating, very much driven by a continuation of improved performance of our outdoor [advertising] business and from our Australian publishing business."
Overall, publishing earned APN News & Media A$107.7 million for the six months to June 30, up 3 per cent on last year.
Regional publishing, including 23 daily and 100 non-daily regional newspapers in Australia, was up 5 per cent.
Hopkins said Australian publishing was performing well because of the strength in the Queensland economy.
ABN Amro media analyst Fraser McLeish said that the strong Queensland economy was apparent in results from Australian companies.
New Zealand national publishing - including the Herald, the Herald on Sunday, the Aucklander and New Zealand Magazines - lagged behind other APN divisions, increasing 1 per cent to A$48.2 million.
Hopkins said that costs were flat despite a 6 per cent increase in the cost of newsprint, showing the early effects of a business restructuring programme.
APN radio interests, including 50 per cent of a joint venture that owns The Radio Network - whose stations include Newstalk ZB and Viva - was up 2 per cent to A$36.5 million.
Hopkins said the company was investing more in its online division, developing products that extended existing APN brands as well as identifying joint-venture partners for standalone internet opportunities.
The nzherald.co.nz website had increased revenue 75 per cent on the previous corresponding period.
The biggest divisional percentage increase was in outdoor advertising which grew 33 per cent to A$9.2 million. However, the growth was from a smaller base.
In June, APN shareholders rejected a scheme-of-arrangement takeover bid from its largest shareholder, Sir Anthony O'Reilly's Independent News and Media, and private equity firms.
McLeish doubted there would be a renewed takeover offer by O'Reilly given the international squeeze on credit that would affect private equity activity.