APN profit and growth on track

Chief executive Brendan Hopkins with the newly launched Herald on Sunday.

APN News & Media, publisher of the New Zealand Herald, expects earnings to keep growing strongly this year as it moves to lift the appeal and reach of its print titles, radio networks and outdoor advertising.

Net profits for the year to December rose from A$103.5 million ($112.5 million) to A$128.3 million helped by improvements in advertising yields - the value of available space - and the buoyant transtasman economy, which boosted advertising demand.

Sales rose from A$1.17 billion to A$1.28 billion. Its dividend rises from 18.3Ac to 22Ac.

APN chief executive Brendan Hopkins said it was still too early to be clear about the outlook for the coming year. He said earnings growth would continue although there was likely to be some slowdown in the rate of that growth.

The board retained its objective of double digit earnings growth and said it was pleased with trading at present, which was in line with expectations and ahead of the same period last year.

The company said as long as trading conditions persisted, profits this year should meet market estimates.

Analysts have predicted a net profit of about A$140 million.

APN's shares were steady in New Zealand, closing unchanged at $5.40, whereas in Australia they slipped 9Ac to A$4.93.

JP Morgan analyst Oliver Ansted said: "The results were strong, they are benefiting from the surprisingly resilient New Zealand economy."

APN's New Zealand operations, which include the Herald and Herald on Sunday as well as the Listener and The Radio Network, generated just over half the group's total sales.

Its New Zealand national publishing division lifted operating profits from A$88.8 million to A$102.9 million.

Moves such as the redesigns of the New Zealand Woman's Weekly, the Listener and the Weekend Herald were helping advertising yields. A $7 million upgrade to the Herald's main printing plant in Ellerslie would add to those gains, extending colour in the newspaper from 48 pages to 96 pages by the start of 2006.

The Herald on Sunday, launched in October, was performing ahead of forecast. Its circulation was more than 100,000 and had attracted 50,000 subscribers. Four-fifths of its sales were fully paid.

APN was also looking to boost profit margins by sharing more resources between its main titles.

Its regional newspaper arm, comprising 23 daily titles in Australia and New Zealand, lifted operating profits from A$80.6 million to A$100.2 million.

In Australia, the titles benefited from a 39 per cent surge in employment advertising and a 27 per cent rise in real estate advertising. New Zealand had gains of 30 per cent and 23 per cent respectively.

APN is spending A$35 million on new presses in Yandina on the Sunshine Coast that will boost the quality of the range of publications it can print in the fast-growing southeast Queensland market.

Operating profits at its radio business, which includes 123 stations across Australia and New Zealand in a joint venture with Clear Channel Communications, the largest US radio broadcaster, rose from A$56.2 million to A$67.5 million.

The division is a leader in broadcasting to the 25-year-old to 54-year-old demographic in the key Sydney and Melbourne markets.

Its two new formats in New Zealand, Flava and Coast, playing hip hop and easy listening music respectively, had audience shares ahead of hopes. APN has more than 50 per cent of listeners aged over 10 in Auckland.

The outdoor advertising and specialist publications divisions also lifted operating earnings.

Hopkins said: "Each division performed well and each showed meaningful improvement over the prior year.

"We look forward with confidence to the year ahead."

He refused to speculate on the possible shakeup of media ownership laws in Australia.