By Jenny Ruth
Friday 1st April 2011
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Weakness in dual-listed APN News & Media's New Zealand earnings is likely to persist through 2011 before recovering in 2012 while the impact of the Queensland floods is waning, says Nathan Zaia, an analyst at Aegis Equities Research, which is owned by Morningstar.
"A moderating decline in Queensland is likely to see EBIT (earnings before interest and tax) slip another A$2 million to A$3 million in the second quarter for Australian Media," Zaia says. Australian media's first quarter EBIT was down about A$6 million (NZ$8.2 million) on the same quarter a year earlier.
"New Zealand will take longer to get firing as stimulus money filters through. Assuming a similar decline in the second quarter, New Zealand EBIT is expected to be around A$8 million lower in the first half," he says.
"The Christchurch earthquake .. compounded what was already a subdued New Zealand economy."
Zaia says he had already expected calendar 2011 would be difficult for advertising. "Pressure on discretionary expenditure means small businesses and retailers operate under tough conditions and extreme events add financial stress and dampen consumer confidence."
He has cut his EBIT forecast for calendar 2011 to A$211 million from A$223 million previously, taking net profit to A$106.1 million from his previous A$113.1 million forecast. Zaia values the stock at A$2.25.
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