Seven Group Holdings has reported a steep decline in first-half net profit as a strong rise in earnings from its WesTrac equipment business was offset by a write down in the value of its stake in Seven West Media.
The Kerry Stokes-chaired company said net profit for the six months to December 31, 2011, came in a $52.14 million, down 57.8 per cent from the prior corresponding period.
Seven said it booked an impairment charge of $161.8 million in the value of its investment in Seven West Media, and a further $5.8 million charge on other investments.
The company said the writedown in Seven West reflected its prevailing share price at December 31, 2011.
"The share price of Seven West Media has recovered significantly since 31 December, and should it remain at these levels, the majority of the impairment is likely to reverse in the second half," Seven said in a statement.
On an underlying basis, which excludes significant items, Seven said net profit rose 29.2 per cent to $159.6 million.
Seven Group chief executive Peter Gammell said the first half result was led by the strong performance of its WesTrac business.
WesTrac, the Caterpillar dealership in Western Australia, NSW/ACT and parts of China, reported a 67 per cent increase in earnings before interest and tax (EBIT), Seven said.
"The company's growth in Australia is being driven primarily by expansion in coal and iron ore mining - with a 30 per cent growth in product sales to $898.7 million," Seven said.
It said WesTrac's China business, while impacted by exchange rate movements, reported a 12 per cent increase in EBIT to $12.3 million.
The National Hire business reported a strong rise in EBIT to $30.5 million.
Mr Gammell flagged a hefty lift in the group's full year net profit, excluding significant items.
"Assuming current market conditions and growth continue, the company anticipates group underlying full year net profit after tax (excluding significant items) will be up 20 to 30 per cent compared to the 2011 full year result," Mr Gammell said in a statement.
Seven Group reported net profit after tax and before significant items of $248.3 million for the full 2010/11 year.
Seven Group declared a fully-franked interim dividend of 18 cents per share.
