APN has scored a hefty profit increase for 2013-14 on the back of the full buyout of its two radio networks, but revenue was flat thanks to a weak advertising market.
The company, which reports by calendar year, saw net profit jump 77 per cent to $22.6m from $12.8m at the same time last year, according to this morning’s half year report.
APN attributes the significant improvement to its full control of Australian Radio Network (ARN) and The Radio Network (TRN), which the company says are highly profitable enterprises
ARN in particular showed strong growth in the second quarter and gained market share to become Australia’s top FM network – largely attributable to investments popular stations like KIIS 1065 featuring Kyle Sandilands and Jackie “Jackie O” Henderson.
The company spent $246.5m in February to buy up the last 50 per cent of the radio networks from American company ClearChannel, which still owns half of Adshel.
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Revenue remained flat at $405.9m, up three per cent but down four per cent on a constant currency basis. EBITA was similarly up one per cent but down six per cent on constant currency.
APN print operations are not in such good shape, with revenue for both Australian Regional Media (ARM) and outdoor media division Adsehl down, though the company says they are positioned for better results by year’s end.
ARM revenue were not as sharp as last year, falling eight per cent to $99.0m with EBITDA down 17 per cent to $10.5m. ‘Resilient local trading conditions’ and real estate helped arrest the revenue slide.
“Consistent with the broader publishing industry, ARM experienced tough conditions in the major retail agency market,” APN says.
ARM has increased its readership by eight per cent with all of the gains in digital, which grey 34 per cent, but unlike much of the print media market managed to hold print readership steady.
The company expects to realise $20m in savings from cost cutting across its publishing assets.
After recording record revenue and EBITA growth for 2013, Adshel erased most of those gains with a five per cent drop in revenue and 19 per cent hit to EBITA.
APN insists this is a result of infrastructure sales and selling off its street furniture manufacturing subsidiary Town & Park in December, and if revenue is compared on a ‘like for like basis’ it is actually up one per cent.
APN chief executive Michael Miller says EBITA was down because of rental payments associated with the Sydney Trains contract beginning several months before the rollout.
“However, this has resulted in good digital revenue growth; with strong advertising spending towards the end of the half,” he says.
“Consistent improvements in bookings since the launch of the network have generated positive momentum into H2.”
The company also oddly blamed “the underperformance of Adshel’s NSW sales team during H1” for the unimpressive results.
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Miller says the company performed better as the year went on and expects a much improved position by year’s end.
“Much of the positive revenue momentum that we have seen towards the end of the half and in more recent months is due to investments that we have made across APN’s businesses. This gives us confidence that we are on the right track,” he says.
“Our focus remains on growing share in our respective markets, being more efficient and increasing our value through closer collaboration.
“With our strengthened balance sheet we have the flexibility to pursue further growth opportunities, which gives me great confidence in APN’s future.”
APN again did not pay a dividend to investors.
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