APN lowers forecast

APN News & Media has downgraded its profit forecast for calendar 2011, citing weakness in advertising markets in Australia and New Zealand as well as natural disasters.

By InvestSMART · 6 Dec 2011

By InvestSMART ·
6 Dec 2011

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APN News & Media has downgraded its profit forecast for calendar 2011, citing weakness in advertising markets in Australia and New Zealand as well as natural disasters.

APN, which owns The New Zealand Herald, now expects net profit for the year will be between $A75 million and $A77 million, which, it said, is slightly below current market consensus.

The near 5 per cent depreciation of the New Zealand dollar since August has also dragged down the result, it said. It expects earnings before interest and tax (EBIT) will be between $A171 million and $A173 million. In August, after reporting a 24 per cent drop in first-half EBIT to $A66.5 million, APN said it expected second-half EBIT would be flat at $A118 million, implying full-year EBIT would be $A184.5 million.

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Frequently Asked Questions about this Article…

What profit forecast did APN News & Media announce for calendar 2011?

APN News & Media said it now expects net profit for calendar 2011 to be between A$75 million and A$77 million, and it expects earnings before interest and tax (EBIT) to be between A$171 million and A$173 million.

Why did APN lower its 2011 profit forecast?

APN lowered its profit forecast citing weakness in advertising markets in both Australia and New Zealand and the impact of natural disasters. The company also said a near 5% depreciation of the New Zealand dollar since August has dragged down results.

How did the New Zealand dollar depreciation affect APN’s reported results?

The article notes a near 5% depreciation of the New Zealand dollar since August, which APN said has dragged down its reported results—reducing the Australian-dollar value of earnings coming from its New Zealand operations.

How does the revised EBIT guidance compare with APN’s earlier August expectations?

In August APN, after a 24% fall in first-half EBIT, expected second‑half EBIT to be flat at A$118 million, implying full‑year EBIT of A$184.5 million. The revised guidance of A$171–A$173 million is lower than that earlier implied full‑year figure.

What happened to APN’s first‑half EBIT earlier in the year?

APN reported a 24% drop in first‑half EBIT to A$66.5 million, which formed part of the backdrop to its revised full‑year guidance.

Does APN News & Media own any major newspapers?

Yes. The article states that APN owns The New Zealand Herald.

Is APN’s revised net profit forecast in line with market expectations?

APN said the net profit forecast of A$75–A$77 million is slightly below current market consensus, according to the article.

What should everyday investors monitor following APN’s downgrade?

Investors may want to watch APN’s updates on advertising market conditions in Australia and New Zealand, any further impacts from natural disasters, and currency movements—particularly the New Zealand dollar—since the company has identified these factors as affecting its 2011 results.