Seven Group considers Coates sale

15/11/2012 - 09:04

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Seven Group considers Coates sale
Seven Group managing director Peter Gammell.

Seven Group Holdings managing director Peter Gammell has painted a mixed picture for the diversified media and industrial services group, forecasting a rise in first-half underlying profit for 2012-13 but signalling tough times ahead and possible asset sales.

Seven Group expects underlying earnings in the range of $200 million to $220 million in the six months to December 31, up from $169.3 million in the first half of 2011-12.

Mr Gammell also announced the company was considering its 45 per cent holding in the profitable Coates Hire equipment business after receiving a number of inquiries from potential buyers.

Seven Group and co-owner The Carlyle Group have appointed Goldman Sachs to handle the strategic review.

Seven Group also owns earthmoving equipment company WesTrac and holds major stakes Seven West Media and Prime Media Group.

It sold its 25 per cent stake in Consolidated Media Holdings (CMH) to News Corp in October, following News' agreement to buy James Packer's majority holding in CMH.

Seven Group will receive $491 million from the sale.

Despite the increased earnings forecast, Mr Gammell warned that the outlook for the company's construction and mining equipment operations in China was uncertain due to declining trading conditions.

The Australian mining equipment business would also suffer in the second half of 2012/13 due to cancelled or deferred mining projects, the company said.

Mr Gammell said the Australian advertising market remains soft and the outlook for media businesses uncertain.

He said he did not believe the current Seven West share price - currently around $1.375 from a year high of $3.80 - properly reflected the company's value.

He highlighted the increased Monday-to-Friday circulation of The West Australian newspaper, saying the result "demonstrates that the West is still a very good media asset".

Mr Gammell told reporters he did not want to move The West Australian towards a digital-focused model - such as Fairfax Media has adopted - too quickly as there was still strength in the print business.

"We've got lots of time to watch other people and see what works," he said.

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