For the second annual meeting in a row, Seven West Media (SWM) CEO Tim Wharton has had glum news for long suffering shareholders on earnings guidance – weak to lower would be the best way to sum it up.
A year ago Worner warned shareholders to expect a surprise slide in profit, which turned out to be spot on, along with a massive $2 billion write-down in the value of the company’s TV licences and other broadcasting and magazine assets.
Yesterday, Mr Worner told Seven West’s AGM in Sydney that profits for 2016 will be at the lower end of its guidance, which was for a fall of between 5% and 10% in underlying earnings before interest and tax.
“Market conditions in the current financial year to date have been somewhat subdued with TV market growth relatively flat and advertising trends in publishing facing ongoing pressure," Mr Worner told the meeting.
"We have maintained our cost discipline with group costs now expected to be lower than the prior corresponding period for both the interim period and the full financial year, excluding third party commissions and events. As per our strategy, we continue to seek to redefine our operating model and pursue cost efficiencies across the group.
"You will recall the guidance we provided for the full year was minus 5-10% underlying EBIT. Taking consideration for current market trends, we expect underlying group EBIT to be at the lower end of that guidance,” Mr Worner said.
Seven West shares are flat at 67.5 cents on the news, but they later bounced more than 3% to close the day on 70 cents. That still left them down 60% in the year from the 2014 AGM.
Mr Worner said group costs were expected to be lower than the prior corresponding period for both the interim period and the full financial year, excluding third party commissions and events.
Chairman Kerry Stokes told the meeting: "Our share price clearly does not reflect the underlying strengths of our businesses and our plans for development.
"Your board is committed to enhancing shareholder value. It is a primary focus for your company over the coming twelve months.”
And Mr Worner also had the share price in mind when he told the meeting:
"The Chairman has already spoken about our share price. I can assure you that I believe your management team is making the right moves to better position this company for the future.”
Those sentiments won’t cause the share price to recover any time soon.
