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APN expects 30% profit slump

APN News & Media expects its full year profit will be about a third lower than last year as advertising revenues decline.

In its latest trading update, APN – which owns the New Zealand Herald and The Radio Network here – says publishing revenue in the second half of this year was down 10%.

That's despite $A25 million shaved off the budget in cost-cutting initiatives, with another $A25 million expected to be cut next year.

Net profit after tax (NPAT) is expected to be $A51-$A54 million for 2012, down from $A78.2 million in 2011.

In November, APN announced it was ditching its southern regional titles in New Zealand, and more recently announced a number of editorial job cuts at its premium Herald title. 

Chief executive Brent Chenoweth says the star performers for APN have been the Australian Radio Network, outdoor advertising division Adshel and deals website GrabOne.

"In contrast, our publishing businesses have felt the full force of the market downturn in both Australia and New Zealand.

"Conditions in H2 have been more challenging than H1 with extremely short bookings and we have not seen the usual seasonal uplift in revenues," Mr Chenoweth says.

APN expects advertising revenues in New Zealand will be 9% lower for the year, mostly due to a drop in display and job ads.

However, it says recent weeks have been more positive and second half EBITDA will be higher than the first half.

Contrary to the Australian Radio Network's strong performance which has seen a 5% increase in revenue, The Radio Network in New Zealand – which includes Newstalk ZB and ZM in its stable – has experienced a 2% drop in revenue.

But despite the lacklustre performance from its New Zealand publishing and radio operations, the deals website GrabOne has outperformed.

APN says GrabOne revenue and earnings are increasing month on month, and it is on track to contribute $A4 million in EBITDA in 2012.

The outdoor advertising arm Adshel is also performing well, increasing market share by three points in Australia and five points in New Zealand.

EBITDA for Adshel is expected to be 25% up for the full year.

On the NZX, shares closed at 38 cents yesterday, down from 43 cents a month ago, and 98 cents this time in 2011. 

callison@nbr.co.nz

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