Voelte comments spark Seven West share spike

13/11/2012 - 12:19

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Voelte comments spark Seven West share spike
Don Voelte told shareholders costs will be slashed to maintain profit.

Seven West Media shares jumped 21 per cent  today following strong words from managing director Don Voelte about his commitment to slash costs in order to maintain last year's $226.9 million net profit.

Mr Voelte said at the company's annual general meeting that the diversified media group is forecasting operating earnings before interest and tax (EBIT) of $250 million for the first half of the fiscal year.

Several million dollars would be taken off that for one-time restructuring, as the group seeks to slash costs.

Mr Voelte said the board and management would have no "no emotional attachment" to any part of the business when it cut costs.

Speaking at his first AGM as managing director, Mr Voelte said the company had implemented restructuring that had reduced this year's capital budget by $14 million and would deliver $60 million in improved revenue and reduced expenses.

“Our goal this financial year is to dramatically limit the advertising market pressure on our $535 million EBITDA and $473.4 million EBIT from last year, and to maintain, and hopefully increase, our net profit after tax as compared to last year’s $226.9 million,” Mr Voelte said.

Seven West has four divisions, including The West Australian newspaper and Seven Network TV.

The company offered 15 editorial staff redundancies at The West Australian newspaper in September.

The Perth newspaper's circulation has risen for a fifth consecutive year, Mr Voelte said, in contrast to the plummeting revenue for east coast newspapers which are slashing costs and jobs.

The business was seeing downward trajectories in advertising revenues in television and publishing, but it appeared to be stabilising, he said.

It would address that leakage, both in new products, as well as restructuring its publishing businesses due to the structural shift into digital.

"Very little is sacred in the terms of costs or the way we do business, Mr Voelte said.

"Despite the success of our businesses, there is no emotional attachment to any aspect of our processes and assets.

"Nor are we naively assuming that the old way is the right way."

Seven West's chairman and largest shareholder Kerry Stokes said the company's share price did not reflect the business or its competitive success.

"Personally I wish I could wave a magic wand to improve our share price," he said.

Seven West's shares are trading at $1.30 at 1200 AWST.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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