KEY POINTS:
The economic slowdown in New Zealand has hit earnings for APN News & Media - publisher of the New Zealand Herald.
Net profit for the six months ending June 30 was A$71.9 million, down from A$72.5 million the previous year on the back of revenue of A$642.7 million,
down from A$644.9 million.
Chief executive Brendan Hopkins said it was a good result considering the global credit crisis and in line with guidance the company gave in June.
"In general it's New Zealand businesses which are not performing obviously to where we would have expected, mainly because of the deterioration of the macro environment there that we've seen through the half," Hopkins said.
A number of major advertisers had cut back on plans for New Zealand.
Operations in Australia and Asia had performed well, while the outdoor business had been a standout and significant progress was being made in the online sector.
APN yesterday said it had bought New Zealand's third-largest outdoor advertising business, Media1, for about $6 million and Hopkins said the company was always looking at opportunities.
"I wouldn't hold your breath about any major acquisitions, but at the same time if the right opportunities present themselves we'd be interested."
New Zealand national publishing revenue was down 10 per cent to A$154.3 million, radio was down 6 per cent to A$117.6 million, regional publishing was up 1 per cent to A$213.4 million and outdoor was up 9 per cent to A$127.3 million.
New Zealand national publishing includes the New Zealand Herald, Herald on Sunday and New Zealand Magazines. Regional publishing includes 23 daily newspapers and more than 100 non-daily and community titles in Australia and New Zealand.
The board was comfortable with analysts' consensus for full-year net profit of A$162 million, Hopkins said.
However, the full-year forecast was dependent on performance in the final quarter, which traditionally accounted for 33 per cent of earnings before interest and taxation, and no further deterioration in the New Zealand trading environment.
Tough second-quarter conditions in New Zealand were expected to continue in the third quarter, although there had been the first rate cut in five years and predictions for exports sounded positive, he said.
"We're hopeful of some help later this year, for sure next year but we're not making any firm predictions at this stage."
ABN Amro media analyst Fraser McLeish said flat earnings before tax and interest despite a drop in New Zealand national publishing revenue showed the company had a diversified asset base.
"There's growth coming through from other areas such as outdoor and their Australian publishing business which is offsetting that weakness in New Zealand."
Earnings before interest and taxation (ebit) and before non-recurring items were A$139 million, down from A$142.4 million the previous year, although on a constant currency basis ebit was flat and trading revenue was up 2.5 per cent to A$624.5 million. Net profit before non-recurring items was A$72.3 million, compared with A$73.2 million the previous year.
The group had substantially completed a business re-engineering programme and restructuring would reduce costs in the next financial year by about A$10 million.
"We've already announced about 235 redundancies across the group," Hopkins said. "We're very determined to keep a lid on our costs."
APN's NZX-listed shares closed up 6c yesterday at $4.08. On the ASX, its shares fell A15c to A$3.30.
APN NEWS & MEDIA
Six months ending June 30
Revenue
2008: A$642.7m
2007: A$644.9m
Net profit
2008: A$71.9m
2007: A$72.5m
Int. div.
2008: A10.5c
2007: A10.5c