NZME first-half earnings edge up 1%

NZME increased first half trading earnings 1 percent as audience numbers ticked up but warned that headwinds remain and said completing the merger with Fairfax Media remains a priority.

Trading net profit was $9.9 million in the six months ended June 30 versus $9.8 million a year earlier, earnings per share of 5 cents, in line with the prior period, the Auckland-based company said in a statemen. Statutory net profit sank to $7.8 million, or 4 cents per share, from $60.8 million, or 23.9 cents, which it said wasn't reflective of the NZME business due to the demerger from APN (now HT&E), tax payments, and the inclusion of the previous ownership interest in the Australian Radio business, it said.

Trading revenue, meanwhile, fell 3 percent to $189.1 million with growth in digital revenue outweighing the decline in print advertising revenue for the second consecutive half year, partly offset by declines in other print, radio and e-commerce revenues.

First half revenue was slightly better than expected, largely due to NZME's strategy to capitalise on incremental audiences driven by the America's Cup and Lions Series. However, trading revenue for the first six weeks of the second half was down approximately 5 percent on the same period last year, highlighting a slower market overall, it said.

Looking ahead, NZME said completing the merger with Fairfax remains a priority to further improve efficiency and underwrite the competitiveness of New Zealand content generation and delivery in an increasingly fragmented market. In terms of current trading, the headwinds seen in recent years in traditional advertising markets have continued in 2017, with no respite immediately evident, it said.

NZME and Fairfax announced in May that they would appeal the Commerce Commission's decision not to clear or authorise the proposed merger, with a nine-day hearing due to begin on Oct. 16.

The board declared a fully imputed dividend of 3.5 cents per share, scheduled for payment on Oct. 27. The dividend is unchanged from the prior period.

Print revenue declined 4 percent to $110.6 million in the first half, after excluding the impacts of business divestments, and represented 58 percent of total NZME trading revenue in the first half.

Radio and experiential revenue of $52.6 million was 6 percent lower on the year and "despite some positive business indicators, such as improving audience share, direct radio advertising remained challenged in the first half of 2017," it said.

The company achieved digital revenue growth of 20 percent in the first half to $26 million, driven by growth across all digital products, with mobile being the most important area of growth, it said. Total digital audience continued to grow to more than 2.6 million New Zealanders. The nzherald.co.nz website has been a key driver with audience growth of 17 percent on the year, it said.

E-commerce revenues from GrabOne remain under pressure, declining 20 percent on the year to $5.5 million.

NZME shares last traded at 95 cents and have gained 24 percent over the past year.

(BusinessDesk)