APN first half profit drops

See also: APN's profit declines 70%, shares slump 30% on NZX

Australasian publisher and radio station operator APN News & Media [ASX: APN] is taking its first step toward a digital registrations platform for its New Zealand flagship newspaper, the New Zealand Herald.

The company says it has plans to roll out registrations on the masthead's website before the end of the year, as it posted a 67% slump in first-half profit today.

The Sydney-based company's net profit sank to $A7.5 million, or 0.7c per share, in the six months ended June 30, from $A22.6 million, or 2.4c, a year earlier. 

The New Zealand division, which includes the NZ Herald and the Radio Network stable of stations, posted a 13% decline in earnings before interest, tax, depreciation and amortisation, to $32.4 million on a 1% decline in revenue to $214.9 million.

The Herald website will begin digital registrations before the end of the year. 

NZME, the local unit, is in talks with rival Fairfax Media to expand on their joint print agreement, and they are also in negotiations to stitch up a distribution deal, which APN says will "deliver incremental revenue and earnings growth."

Earlier this year, the NZME strategy was outlined to shareholders. Company executives say the New Zealand unit is looking at content across all platforms as being either news, sport or entertainment. 

It says the strategy will help convert its audience into registered users, who will be offered member benefits in exchange for their data. Monetising the audience will include memberships, subscriptions, pay-per-view and personalised content.

NZME was carved out as a standalone business last year, with APN intending to sell down its stake in the New Zealand business in an initial public offering, which has since been delayed.

The New Zealand unit's integration of its New Zealand Herald, TRN radio group and GrabOne voucher business has generated $A18 million in savings, at a cost of $A1.4 million in redundancies and $A657,000 to outside consultants in the six-month period, it says.

APN's group profit was dragged down by $A17.7 million of one-time costs, largely related to the loss of an outdoor advertising contract in Hong Kong with Buzplay.

Stripping out the exceptional items, profit rose 5.5% to $A25.1 million on a 5.3% gain in revenue to $A427.6 million.

The Australian regional newspaper division reported a 5 percent decline in first-half revenue to $A94.5 million and a 22 percent drop in Ebitda to A$8.2 million, and the company is looking at ways to expand a distribution partnership with 15 percent shareholder News Corp.

The Australian radio division boosted revenue 29% to $A104.6 million for a 26% gain in earnings to $3A6.6 million, due to investments in Perth, Melbourne and the drive time period.

The outdoor advertising business posted a 12% decline in revenue to $A24.8 million and a 28% drop in earnings to $A3.3 million due to the lost contract in Hong Kong.

APN's debt gearing had been reduced by its strong cash flows, but wasn't low enough to reinstate dividend payments. The company more than doubled operational cash inflow to $A37.3 million in the half. It also extended its $A655 million debt facility to a 2019 maturity.

Ciaran Davis, APN's former head of the radio, took over as chief executive today, replacing Michael Miller, who left to rejoin News Corp as executive chairman for Australasia.

APN's dual-listed shares last traded at 91c on the NZX, and 66Ac on the ASX.

(BusinessDesk)