Daily ShareChat: APN News & Media

By Jenny Ruth

Monday 8th March 2010

Cost-cutting by Australia-based APN News & Media should enhance its operating leverage as the advertising market recovers, says RBS Equities analyst Fraser McLeish.

APN, which publishes the New Zealand Herald and other local newspapers, The Listener and owns more than 120 New Zealand radio stations, reported a normalised 2009 net profit of $A94.2 million ($NZ122.7 million), down from $A143.1 million the previous year.

That was in line with McLeish's forecast and at the upper end of management's most recent guidance, although he says the company reduced its guidance a number of times over the course of last year.

"Underlying revenue fell 14% in 2009, slightly more than the 12% we had forecast. However, the cost reduction of 8% was also a bit ahead of expectations," he says.

McLeish expects the company's recent return to revenue growth in virtually all areas of its business to accelerate as the advertising market continues to improve. In New Zealand, the Auckland market appears to be recovering ahead of the regional areas, he says.

He is forecasting revenue growth of 6.6% in 2010 and that costs will also rise 3.2%. "We expect the cost base to start to tick up again as revenues start to improve. However, APN indicated staffing levels are unlikely to grow."

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