NZME's headquarters in central Auckland. Photo / Jason Oxenham
NZME's headquarters in central Auckland. Photo / Jason Oxenham
NZ Herald publisher NZME has delivered earnings of $21.4 million and an after-tax profit of $1.9m for the first half of its financial year - and has implemented a $6m savings plan in the second half to ensure it stays within forecast earnings.
NZME - also owner of Newstalk ZB,a suite of entertainment radio stations and property website OneRoof - has today reported revenue of $171m for the six months to June 30, $5m more than the same period in 2023.
That revenue growth, in a challenged media market and economy, has been described by chief executive Michael Boggs as “phenomenal”.
NZME chief executive Michael Boggs. Photo / Michael Craig
NZME’s Ebitda of $21.4m was up on the $21.3m in 2023. Its after-tax profit of $1.9m was also relatively stable - the company delivered a profit of $2m in the first half of 2023.
The company said it had delivered growth in advertising revenue of 4% in the first quarter of the year, but this slowed in the second quarter to 2%. The current quarter was tracking to 1% growth year on year.
Operating costs in the first half were $149.6m, up 3%. People costs were relatively stable (up 1%).
There had been a 16% increase in selling and marketing costs. The company put this down to higher agency commissions, with a higher portion of revenue through the advertising agency channel, and higher audio marketing costs from planned promotional activity.
It had implemented initiatives to remove $6m of annualised cost which would take effect in the second half.
“The difficult trading conditions and reduced confidence levels within the business community have seen the advertising market reduce year on year,” said Boggs.
He said OneRoof continued to deliver “rapid” audience, revenue and profitability growth.
“As we head into our largest quarter of the financial year, businesses are signalling their intention to spend as sentiment improves. NZME remains well-positioned to take advantage of this growth.”
Nevertheless, the operating environment remained uncertain.
The company said it expected to deliver earnings at the “lower end” of the previously issued range of $57m-$61m by year-end.
One of NZME's top stars, Newstalk ZB host Mike Hosking. Photo / Michael Craig
Key highlights
Boggs said NZME remained a “top performer” in the media industry.
“We continue to enhance our digital performance to ensure we’re delivering value for our shareholders. We are working hard to drive improvements and in areas like audio, we continue to outperform the market with total share of revenue outperforming its share of audience.”
An increase in operating revenue and significant growth in digital revenue to $50.1 million this half, up $5.9 million on the first half of 2023;
OneRoof was described as a “standout performer”, with digital growth leading to a profit for the half;
OneRoof had closed the audience gap on TradeMe to a “mere 10%” and OneRoof’s listings inquiries had increased by 29%;
Digital audio revenue increased 33% year on year;
NZME’s digital publishing business delivered an increase in profitability in the half, with digital subscription revenue up 13% and digital subscriptions up 11% on June 30, 2023.
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The company’s half-year report also reveals that digital subscriptions, including NZ Herald subscriptions, now number 137,000 - up 7000 on last year. Digital reader revenue for the half had increased 13% to $11.1m.
Boggs said the company had a clear three-year strategy.
This was focused on “driving the company’s digital transformation forward, rapidly enhancing our customer experiences and leveraging emerging technologies to grow our competitive advantage”.
“The business will continue to introduce market-leading innovative products, accelerate the delivery of new customer experiences, streamline business processes, and improve productivity and efficiency across the business in the next six months and beyond.”
Capital management
NZME chair Barbara Chapman.
The company said distributions to shareholders during the first half were 6 cents per share. “This was the 2023 final dividend and was paid on March 20.”
Net debt at June 30 was $30m.
“This is a seasonal increase from $18 million at 31 December 2023 and the leverage ratio remains well within the target range of 0.5–1.0 times Ebitda and is consistent with the same period last year. We project a reduction in net debt by the end of 2024, with the leverage ratio returning to the low end of the target range.”
The NZME board declared a fully imputed interim dividend of 3 cents per share, payable on September 25.
Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.
