Gammell upbeat as Seven Group beats expectations
SEVEN Group Holdings chief executive Peter Gammell says the media and earthmoving equipment company is on track for buoyant full year earnings on the back of Australia's mining boom.
SEVEN Group Holdings chief executive Peter Gammell says the media and earthmoving equipment company is on track for buoyant full year earnings on the back of Australia's mining boom.The Kerry Stokes-controlled Seven Group reported statutory net profit for the six months to December 31, 2011, of $52.14 million, down 57.8 per cent from the prior corresponding period.The result was affected by writedowns on Seven's media assets.However on an underlying basis, which excluded writedowns, total group first half net profit rose 33 per cent to $169.3 million.Also, the company was keen to stress that comparisons with the prior year were difficult given the changes in company structure over the past 12 months.Seven West Media was formed after a West Australian Newspapers Holdings' $4 billion takeover of Seven Media Group in February 2011, which created the nation's largest media company.Mr Gammell said the writedowns were due to Seven West Media's share price deterioration towards the end of calendar 2011.However, he said the recent share price recovery, if not reversed, would see the majority of the impairment charge likely to be reversed in the second half.The underlying result was above market expectations and led to Seven Group shares closing up 3.81 per cent, or 33?, at $8.99, the stock's highest close since August, 2011.Mr Gammell said underlying net profit after tax and before significant items for the full 2011-12 year was forecast to be 20 to 30 per cent higher than the prior year."WesTrac has continued to trade strongly, particularly in Australia," Mr Gammell told analysts and media in Sydney on Wednesday."At present, we continue to be confident that the year should be another good year for growth, both in Australia and China, although the growth for China will be less strong than in previous years."Seven Group reported net profit after tax and before significant items of $248.3 million for the full 2010-11 year.Demand for resources led to Seven Group's WesTrac business posting a 67 per cent lift in earnings before interest and tax, driven by coal and iron ore mining. WesTrac is the Caterpillar dealership in Western Australia, NSW/ACT and parts of China. It also owns National Hire and AllightSykes and is a 46 per cent shareholder of Coates Hire.Seven Group declared an interim dividend of 18 cents a share.