Shares in Independent News & Media added 2 per cent yesterday as its 40-per-cent-owned Australian associate, APN, delivered a better-than-expected first-half performance.
Improved margins in its newspaper and radio division helped APN to report a 36 per cent rise in first-half profit before tax and non-recurring items to Australian $94.5 million while earnings per share rose by 25 per cent to 12.2 cents.
APN said it was well-positioned for continued above average growth with strong double digit growth in earnings before interest and taxation remaining evident in the first seven weeks of the second half of the year.
"Providing current market conditions continue, the company now believes it will better the forecast net profit after tax for 2004 of A$120 million, after expensing the expected trading losses of the Herald on Sunday," APN chief executive Mr Brendan Hopkins said.
In July, APN announced the launch of the Herald on Sunday, an Auckland-focused newspaper that will extend the Herald's franchise to seven days a week.
It is expected to become a profitable business within three years.
Shares in APN added 4 per cent to A$4.44, their highest level since January 2001, following the release of the results. Independent's share price closed 2 per cent higher at €1.96.
APN, which declared an interim dividend of 8 cents per share, a 23 per cent increase on the first half of last year, said group revenue rose by 10 per cent to A$599.2 million.
The company's publishing business, which includes 23 regional daily newspapers and more than 90 non-daily titles as well its New Zealand publishing interests, reported a 22 per cent increase in earnings before interest and taxation (EBIT) to A$91.3 million on a constant currency basis.
APN also announced a A$25 million upgrade to newspaper printing facilities on the Sunshine Coast in Australia with the development of a new greenfield site in Yandina.
Meanwhile, the company's radio division reported a 23 per cent increase in EBIT on a constant currency basis to A$26.1 million while APN's print and specialist business recorded a 56 per cent increase in EBIT to A$3.9 million.
But its outdoor advertising division turned in a more sluggish performance as a number of uneconomic contracts restricted EBIT growth to 3 per cent or a total of A$9.3 million.
Analysts said APN's first half performance was good news for Independent News & Media, especially as the Australian business is the second largest contributor to the Irish group's balance sheet after its domestic operations.
"The results should boost market sentiment for Independent News & Media, strongly underpinning the 2004 earnings per share forecast of 14 cents before goodwill and exceptionals," company broker Davy said.
APN also announced the appointment of Mr Gavin O'Reilly, chief operating officer of Independent News & Media, as a non-executive director.
