Independent’s Australian papers see profits tumble

GAVIN O’Reilly has told shareholders in Australian media group APN that the business is likely to see net after-tax profits fall by between Aus$30 million and Aus$40m (€16.7m and €22.3m) in 2009.

The company is likely to record profits for the year of between Aus$100m and Aus$110m (€55.6m and €61.2m). This follows after-tax profits last year of Aus$140.1m and a record $169.4m the previous year, as the tough trading conditions facing media companies continue.

Mr O’Reilly, who became chairman of APN a year ago, said at the company’s annual general meeting, that most of the profit decline would occur in the first half of the year.

He said the second half of 2008 was impacted by the global economic downturn and a further second half decline this year isn’t expected. He also told shareholders capital expenditure for this year would only amount to around Aus$25m and it would remain at that level for the next couple of years – a far cry from the Aus$80m outlay levels seen only last year.

Independent News & Media, of which Mr O’Reilly is chief operating officer and chief executive designate, looked to sell its 39.2% stake in APN late last year after receiving unsolicited approaches.

The failure to sell that stake, which could have put a significant dent in INM’s €1.4 billion debt and helped raise funds to pay-off a €200m bond due this month, has been attributed to the lack of an acceptable bid as a result of the deterioration in world credit markets.

INMs auditors, PricewaterhouseCoopers (PwC) said in its unqualified note to the group’s latest annual report that there was “material uncertainty which may cast significant doubt” about INMs ability to continue as a going concern.

However PwC said the group’s financial statements for 2008 – published last week – didn’t include any adjustments “that would be necessary if the group were unable to continue as a going concern”.

Elsewhere, yesterday the fragility of the global media market was evident with the Perth-based West Australian Newspapers cutting its full-year profit forecasts amid drops in advertising revenue. The Boston Globe newspaper said it is continuing efforts to reach agreement with trade unions over cost-cutting/job-loss measures that, it says, could save the paper in the long-term.