We saw two profit downgrades from differing ends of the market.
The recently-created Kerry Stokes-dominated Seven West Media Limited yesterday cut its forecast pre tax earnings before interest and tax by around $10 to $20 million for the year to June 30 because of weak conditions in the newspaper and magazine ad markets.
Seven West Media was formed earlier this year from the merger of West Australian newspapers (24% owned by Mr Stokes) with Seven Media Group (47% owned by Mr Stokes).
"Currently, the company is expecting "pre-synergy" FY11 pro forma EBITDA (including associate income) to be between $610 million – $620 million, compared to the forecast of $630 million which was provided in the transaction documents," the company said in a statement to the ASX.
"Seven West Media Limited expects the results for the Seven Network to be close to the forecasts contained in the transaction documents, with some shortfalls in contributions from magazines and newspaper publishing as a consequence of a softer than expected advertising revenue.
"While there is some current weakness in the advertising market, the Directors of Seven West Media Limited note the continuing strong performance of the Seven Network in ratings and revenue shares in the current market."
Seven West Media shares fell 2.7%, or 12c, to $4.24 and at that price, Seven West is valued at $2.65 billion.
And at the bottom of the market, Penrice Soda has formalised a previously announced profit warning with news of a loss for the year to June.
In a statement to the ASX. Penrice said:
"Penrice Soda Holdings Limited (Penrice) today announced that the company expects full year normalised earnings to be in the range $0.5 million to $1.5 million loss after tax.
"Guidance provided previously was that full year underlying earnings would be less than Penrice’s 2010 financial year result (a profit of $5.3 million), due to factors materially affecting earnings, including the Queensland floods’ impact on demand for soda ash and sodium bicarbonate, foreign exchange rates effect on margins, and uncertain timing and extent of recovery of a major insurance claim.
"Today’s guidance incorporates those factors and also a lower than expected demand for soda ash from two major customers in the current quarter which is not anticipated to extend into the new financial year.
"On a statutory basis, this full year earnings forecast represents an after tax loss in the range $3.5 million to $4.5 million. This excludes any further insurance claim recovery above the $0.4 million after tax ($0.5 million before tax) already received. Normalised earnings guidance assumes the insurable events reduced earnings by $3.5 million after tax.
"The company remains confident it will recover a substantial portion of this loss; however, these further insurance recoveries are now more likely to be realised in the 2012 financial year."
Penrice shares dropped 11.9%, or 2.5c, to 19.5c. It’s valued at just $19 million.
