APN News & Media has taken a 67 per cent profit hit, thanks to $17m in exceptional items and losing half its Hong Kong business, while revenue stayed flat.
Despite the huge fall in the first six months of 2015, profit excluding the exceptional items is up three per cent to $25.1m, and chief executive Ciaran Davis says the investments set it up for further growth in the next six months.
The measures include the acquisition of Perth radio station 96fm, a $25m cost-cutting program, and new technology in its outdoor media businesses.
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Investors are not convinced about the strategy, sending its shares tumbling 23.5 per cent following the announcement.
They recovered to be only 13 per cent down by the end of the day but have kept falling since to be down 20.5 per cent to 52.5c today. APN shares have lost almost half their value since March.
Group revenue was up five per cent to $427.6m with EBITDA up 0.7 per cent to $71.2m after what Davis says was a soft second quarter which has continued into July.
“APN's 2015 first half results reflect a soft advertising market in Q2 and a company in an important transition phase,” he says.
Much of the $17m in exceptional items was a result of disaster striking its Hong Kong outdoor business, where the loss of a big bus contract blew a $12.8m hole in its balance sheet.
The contract was worth about half the operation’s revenue and its loss put half its staff out of work, with the business now being ‘actively rebuilt with a new management team’.
Revenue for its Australian Regional Media newspaper business fell five per cent to $94.5m with an EBITDA slide of 22 per cent as newspaper revenue continues to be squeezed.
ARM is focusing on growing its digital revenue, which is up 40 per cent, and says closing its Toowoomba printing plant and new editorial systems will lead to $10m in cost savings.
Advertising revenue is down six per cent, with local advertising holding steady at two per cent down – somewhat better than the big falls seen in metro newspapers at News Corp and Fairfax.
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Outdoor business Adshel increased revenue eight per cent and EBITDA six per cent, but saw costs rise by nine per cent with higher rent costs, the rollout of new technology, and more panels.
In not so good news for wide format printers, most of the growth is coming from digital, with widespread conversion of its printed inventory to digital and boosting the number of screens in its Sydney Trains network to 200.
Davis says digitising print assets will ‘drive revenue and market share growth’ and that APN is ‘evolving its traditional media business models’.
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