Seven reviews Westrac business

The news was announced at Seven's shareholders meeting in Sydney on Thursday, along with a review of the Coates Hire business it co-owns with private equity firm The Carlyle Group to explore "ownership alternatives".

Seven's executive chairman, Kerry Stokes, told investors it had been a challenging 12 months for the Westrac business in China and "we are currently working to ensure that our cost base there reflects this lower level of demand".

The Seven managing director, Peter Gammell, said the company remained cautious about Westrac China and noted that trading conditions continued to decline.

"As a result, sales and earnings before interest, tax, depreciation and amortisation [EBITDA] for the region will be significantly down on the prior corresponding period," he said.

"This is not China falling off a cliff, it's just about making sure you don't size up your business for a level that's not there."

Seven confirmed there were no such problems with its Australian Westrac business, which reported a record result last year and accounted for more than 66 per cent of the company's earnings.

Mr Gammell said that while the absence of new mining projects would mean equipment sales would return to more normal levels, this would partly be offset by a growing and recurring earnings stream from product support.

Seven and Carlyle have appointed Goldman Sachs to conduct the review of Coates Hire. It is understood the investment bank has a mandate to sell 100 per cent of the business, which reported a 22 per cent jump in revenue last year to $1.3 billion and a 40 per cent rise in net profit to $318 million.

The two partners attempted to float the business with a $3 billion valuation earlier this year.

"Clearly there is not an IPO [initial public offering] market available at the moment but we have had some inbound inquiries as a result of that process," Mr Gammell said.

Mr Stokes said the overall outlook for Seven was strong with the company expecting first half underlying profit in the range of $200 million to $220 million.

The impending sale of Seven Group's $491 million stake in Consolidated Media Holdings to News Corp would further skew the company's earnings towards industrial services, which now provide 80 per cent of its earnings before interest and tax.

The company said it remained committed to its media investment - a 33 per cent stake in Seven West Media. "We see good long-term value in the company," Mr Stokes said.