Huge losses and weaker earnings for APN

Further impairments to APN News & Media’s publishing assets have driven the company’s bottom-line loss to $A455.8 million, while earnings came in weaker as expected.

APN, publisher of the NZ Herald, says its normalised net profit after tax and of $A54 million for the year to December (down from $78.2 million) was in line with guidance.

Revenue fell 13% from $1.07 billion in 2011 to $928.6 million.

Earnings before interest, tax, depreciation and amortisation came in at $156 million, at the top end of guidance, but down on the $208.9 million reported in 2011.

The company reported net debt of $US465.2 million at December 31, 2012, a reduction of $180 million on the previous year’s balance date.

The result came at the end of a torrid week for the company which saw chief executive Brett Chenoweth, chairman Peter Hunt and independent directors Melinda Conrad, John Harvey and John Maasland resign after the media group’s corner stone shareholders opposed their plans for a capital raising.

The shareholders include Irish media group Independent News and Media and Australian-based fund manager Allan Gray.

APN’s new chairman Peter Cosgrove says, “the structural changes to media together with the weak advertising markets have impacted the results. Work has been done to reposition the business and we are seeing encouraging improvements".

APN says it will continue cost cutting  in its publishing divisions and look to save another $25 million this year.

Shares in APN News & Media are trading down 2c or 5.7% at 33c on the NZX, where they had hit a record low of 31c on Tuesday after the boardroom clean-out.

A final dividend will not be paid.

Dealing with debt

Reducing APN’s debt levels is an ongoing objective, Mr Cosgrove says.

A debt reduction target of $40 million to $50 million will be achieved by organic earnings including the cost reduction program in publishing as well as small asset and property sales.

“The structural changes to media together with the weak advertising markets have impacted the results.

“Work has been done to reposition the business and we are seeing encouraging improvements. We have also been disciplined in reducing costs while investing in growth where appropriate,” Mr Cosgrove says.

“Australian Radio Network, Adshel and GrabOne all delivered good performances in 2012, with strong increases in revenue, earnings and market share. These results have been achieved in a difficult environment.

“Our publishing divisions are pushing through extensive change agendas which have been well received by our audiences and are gaining traction with advertisers. Cost reduction programs delivered $25 million in savings in 2012, with another $25 million reduction expected this year.”

Outlook

Mr Cosgrove says trading had been positive in the early part of 2013 with revenue declines moderated in publishing.

The impact of the recent Queensland floods is still being assesed but is expected to be lower than in 2011. 

Revenue in all other divisions is up on the same time last year.

dbridgeman@nbr.co.nz