Tough times continue in the media sector, despite the market lifting share prices for major players in anticipating of a return to the good old days.
The Kerry Stokes-dominated West Australian newspapers (WAN) saw its shares rise by more almost 3%, or 21 cents to $7.51 after it reported an after tax profit of $22.9 million for the 3 months to 30 September 2009, down 22.9% on the $29.6 million for the same three months of 2008.
The shares did better than the market which was down a fraction on the day.
The result was after a 14.4% fall in group revenue for the quarter to $99.3 million from $116.0 million.
Group profit was off 22.2% at $36.5 million (from $46.9 million a year ago). The fall in the West Australian’s contribution was a much bigger 27.9% over the three months.
Investors picked up on the comments from CEO, Chris Wharton (a former Seven executive) that the result reflects an improvement of 18.6% on the average of $19.3 million recorded in the previous two quarters.
“We are seeing positive trends and, almost without exception, we have seen week-on- week growth since August," he said in a statement to the ASX.
“We are encouraged by the results for the quarter and remain optimistic that the Western Australian economy will continue to strengthen and that the Group is well placed to benefit from this growth.
“We have made progress by focusing on the basics of quality content, circulation, advertising and effective cost management.
"We have not, and will not, lose focus on their importance to the long term sustainability of the business.
“Despite the improving performance, relative to the past two quarters, our results continue to be below those of the boom revenue levels that prevailed during the corresponding period last year, and this is likely to continue for the remainder of the calendar year.”
But despite this positive trend in the last two quarters, results remain down on the corresponding period last year.
In fact much of the improvement in earnings came from the negative side of the paper’s recent business history: savings from staff cuts and lower paper usage, which reflects the sharp, 20% fall in classified and display advertising.
The company said earnings before interest and tax for the West Australian, the major money spinner, were off almost 28% at $30.1 million from $41.8 million a year ago.
"Total revenue was down 17.2% to $73.2 million. Net advertising revenue down 21.0% to $53.9 million and circulation revenue down 5.2% to $16.8 million.
"Total gross advertising in The West Australian was down 20.7% on the corresponding quarter last year, with a 14% decrease in volume and a 7% reduction in the average advertising rate per column centimetre, due to a change in the mix of business.
"Net Circulation revenue in The West Australian was down by 5.2% on the corresponding quarter last year. Several factors contributed to the decline, including increased Distributor remuneration and reduced Saturday circulation.
"Circulation numbers have remained strong, relative to the same quarter last year, noting that last year’s numbers inflated by the Olympics.
"Expenses in The West Australian for the three months ended 30 September 2009 were 7.7% lower than for the corresponding period last year.
"Total personnel costs fell 4.0% to $18.5 million, as some of the savings from the voluntary redundancy program were realised in this first quarter. As expected, the full extent of the savings will not be achieved until the third quarter of this financial year.
"Newsprint expenses declined 16.7% to $9.2 million, assisted by a 9.6% drop in paging.
"Distribution expenses fell 7.5% to $3.8 million, as a result of optimisation of road freight arrangements.
"Other expenses fell 9.3% to $7.1 million, reflecting ongoing tight management of costs."
WAN holds its AGM in Perth later today.
