WAN flags full-year profit slump

Publisher West Australian Newspapers Holdings (WAN) has posted a modest rise in reported net profit for the nine months to the end of March, but nearly all other performance indicators showed a major slump.

WAN's reported after tax earnings lifted 5.2 per cent to $77.7 million for the nine months to March 31, compared to the same period last year.

The reported gain largely reflected the inclusion of a one-off loss in the previous period from divesting its Hoyts cinema chain at a loss.

WAN said it expected its results for the June quarter would be on par with the March quarter, though it did not disclose details.

If so, this will deliver a full year net profit between $93 million and $98 million, down from WAN's previous guidance of between $100 million and $108 million.

This compares to WAN's reported net profit of $109.9 million for the 2007/08 financial year.

Chief executive Chris Wharton said the year-over-year decline in the advertising market sharply increased at the beginning of the March quarter but "appears to have stabilised".

"While no turnaround is yet apparent, no further decline is expected in monthly run rate," he said.

Net advertising revenue from WAN's flagship publication and Western Australia's monopoly daily newspaper, The West Australian, fell 12.2 per cent to $184.4 million for the nine months to the end of March, compared to the previous corresponding period.

Total classified revenues for the newspaper fell by 17.4 per cent, with employment ads plunging by 36.7 per cent.

But revenues of the New Homes advertising supplement rose by 33.6 per cent.

Total revenue from The West Australian slid 10.6 per cent to $244.8 million.

Circulation of the Saturday edition of the newspaper inched 0.2 per cent higher, while circulation of the weekday editions lifted by 1.6 per cent.

"Steady progress is being made in improving circulation levels and in rebuilding relationships with distributors," Mr Wharton said.

WAN said a 5.6 per cent dip in The West Australian's circulation revenue was partly due to the introduction of a new distributor compensation arrangement.

Disgruntled distributors had for several years called for their contracts to be renegotiated in light of higher oil prices and a larger Saturday newspaper, which required it to be distributed in two sections.

WAN said its digital publishing division recorded a loss of $4 million for the nine months to March 31 but "the rate of loss has shown a steady improvement each quarter".

Mr Wharton said in February the financial performance of this division would improve through an online news joint venture between WAN and Yahoo!7, which is operated by the publisher's largest shareholder Seven Network.

"The revenue and cost saving benefits to flow from the Yahoo!7 arrangement should start to appear in the first quarter of the next financial year, when the new site will be fully operational," WAN said on Tuesday.

Shares in WAN closed down nine cents, or 1.81 per cent, at $4.87.