Queensland growth boosts APN performance

Brendan Hopkins

Strong growth in the Queensland market and outdoor advertising sector has helped APN News & Media to post another record result for the six months to June 30.

The Sydney-based media company - which owns the New Zealand Herald - reported net profit of A$72.1 million ($86.9 million), up 9 per cent on the same period last year.

Chief executive Brendan Hopkins said APN remained on track to report another rise in full-year profit despite slowing economic conditions in the New Zealand market.

Earnings per share growth was expected to be between 5 per cent and 10 per cent for the full year.

The contribution of the New Zealand National publishing division to the final result was negatively impacted by a 14 per cent drop in the value of the kiwi relative to the Australian dollar.

However, in currency-adjusted terms, it was still ahead of last year with ebit (earnings before interest and tax) growth of 4 per cent.

The Herald retained its position as the country's most read daily newspaper, with 547,000 readers on a typical day, and circulation revenue rose 7 per cent.

Hopkins said while the New Zealand economy had definitely slowed, particularly in the second quarter, earnings were being offset by the regional publishing business in Australia and the outdoor business - which was performing well across Australia, New Zealand and Asia. "So you've got two standout performers."

In New Zealand, outdoor accounted for just 2.5 per cent of total ad spend compared with about 4 per cent in Australia and about 10 per cent in Europe so there was still room for significant revenue growth.

The division had produced a 49 per cent increase in ebit to A$9.8 million.

In Queensland, continued population growth had supported growth in real estate advertising.

The radio division was relatively flat, consolidating earnings after several periods of strong growth. It delivered ebit growth of 4 per cent on a currency-adjusted basis.

In the online media sector, APN remained focused on a strategy of organic growth as opposed to large-scale acquisitions favoured by rival Fairfax - which paid $700 million for Trade Me in March.

"Obviously we had the opportunity to buy Trade Me and we chose not to," Hopkins said.

Online was now contributing close to A$20 million in annualised revenue.

APN had already launched careers website Search4Jobs and planned to launch several new sites in the classified space and in other specialised business areas over the next 12 months.

The Herald's online news site nzherald.co.nz had achieved 60 per cent year-on-year growth in advertising revenue and was turning in record revenues every month, Mr Hopkins said in today's Dominion Post newspaper.

Mr Hopkins added that his management believed the advertising revenues from nzherald.co.nz could be higher than those from the Herald on Sunday newspaper by the end of the year. The site's revenue growth was expected to continue into the 2007 financial year.

Brendan Hopkins went on to say that while APN wasn't focused on any specific large acquisition there was still excellent potential for partnerships and co-investment.

APN declared an interim dividend of A9.7c a share, up 10 per cent. Earnings per share were up 12 per cent to A15.3c a share.

The company's shares were steady yesterday at A$4.94.

* APN owns nzherald.co.nz, the New Zealand Herald, Herald on Sunday, Aucklander and other papers throughout the country. It is also joint owner of The Radio Network.

Additional reporting by nzherald staff