Kerry Stokes’ Seven West Media has produced a full-year profit thanks to intense cost cutting and the absence of the massive, near billion dollar asset impairments we saw a year go.
But there was no sign of a return to dividends as the TV broadcaster, magazine and newspaper group committed itself to more cost cutting in the year ahead.
The company posted a net profit of $135.8 million for the year to June 30, compared to a net loss of $744 million in 2016-17, when it had been hit by weak ad revenue and a heavy write-offs (nearly $989 million) in the carrying value of its television licences and other assets.
Annual revenue fell 3.2% to $1.62 billion, from $1.67 billion a year earlier as ad revenues for its free to air TV, magazine and newspaper businesses all fell.
CEO Tim Worner says the company maintained a "single-minded focus" on improving its core business with ratings, revenue and cost savings the priority.
"Our transformation accelerated in the second half of the financial year and delivered $61 million of cost savings on our initial $40 million target," Mr Worner said on Tuesday.
Annual underlying earnings before interest, tax, depreciation and amortisation fell 9.9% to $235.6 million, which the company said was at the upper end of its $220-$240 million guidance range.
Mr Worner said Seven West was looking at a 5% to 10% rise underlying earnings growth in 2018-19 (which would still leave it short of the $261 million earned in 2016-17).
Helping to drive this would be more cost cutting – 7% of its staff was chopped in the year to June and more jobs will go in the coming year.
Mr Worner said its cost cutting program is on target to deliver net group cost savings between $10 million and 20 million in the current year after producing $61 million of savings in the six month to June which was ahead of the forecast $40 million.
The financial statements show 2017-18 was another really tough year for Seven West. Group revenue fell 3.4% to $1.620 million, with TV revenues (including Seven Studios down 8.0%) down 1.2% at $1.265 billion and EBIT down 13.5% at $216 million; West Australian Newspapers revenues fell 6.1% to $204.1 million and EBIT dropped 19% to $21.1 million and Pacific magazines saw revenues down 17% at $139.5 million but EBIT jumped 175% from a very low $3.5 million to $9.6 million in the year to June 2018.
In the expectation of a turnaround, Seven West shares have surged this year, more than doubling from 51 cents in February to $1.065 at the close on Monday – including a rise of 15% in the past six trading days when more than 52 million shares changed hands – including more than 15 million on Monday.
The shares ended unchanged at 1.065 after plunging to a low of 94.5 cents for the day.
