APN Chief Executive, Brendan Hopkins, has described ARN’s results as “outstanding” in the company’s half year profit announcement. APN’s Radio Division contributed $26.1 million to the group’s bottom line, an increase of 21% on last year, and a significant part of the company’s record before-tax profit of $94.5 million.
For the first time, the company’s radio division results were disclosed by the business unit, revealing Australia’s ARN Network made $17 million profit before interest and taxes, and New Zealand’s TRN Network made $9.1 million.
“It’s a high quality set of numbers,” Brendan Hopkins told radioinfo at the company’s media briefing.
APN’s net profit is $56 million, 25% above last year’s figure after non-recurring items are taken into account. The biggest contributor to the bottom line is APN’s publishing division, with radio the second highest profit centre in the company.
Radio (ARN and TRN combined) has earned revenues of $111.1 million, compared with the Publishing division’s $326.7 million.
ARN’s revenue has grown by 19% on last year to $61.4 million, while in New Zealand, TRN’s revenue has risen by 7% on last year to $49.7 million.
Hopkins attributes the increased radio revenue in Australia to improved national agency sales, which have been the result of increased ratings: “At ARN, local sales have always been good, but now, we are also seeing national sales increasing, which is very pleasing… Yield, inventory and rate management boosted revenue and EBIT.”
“Key to the result was the improved margins in our Newspaper and Radio Divisions which, together, account for 90 per cent of APN’s profit… We have invested a significant amount of product development in our radio market.”
Australia’s MIX stations are being re-branded under the ‘feel good’ image, while the Classic Hits stations have “good ratings.” Hopkins has commented that one newspaper article after the latest ratings was “scandalous” in its misunderstanding of the results – highlighting a fall in position for WSFM, while the station’s ratings barely changed, but other stations shifted position around it.
In New Zealand, Hopkins highlighted the successful launch of COAST FM in Auckland, which is targeted at baby boomers, and FLAVA 96.1, which is a hip-hop and RnB urban youth station. Further network rollout is set to continue into the second half of the year and a listing on the New Zealand stock exchange is pending.
Hopkins has also pointed out that the company has businesses in strategic growth areas and is expecting positive results to continue. He has dismissed the threat of DMG’s new older demographic stations affecting ARN in the next 12 months because they are not expected to be on air that soon, but beyond that 12 month timescale, he is non-committal.
Commenting on the success of ARN’s demographic focus and the potential threat of DMG, he has told radioinfo: “At long last, agencies understand the 25-54 demographic… We have energised the competition… There is a view which says when others come into the sector, it grows.”
Hopkins says ARN has had discussions with DMG about the station they jointly own in Brisbane, NEW 91.3 FM, but he would not comment on whether DMG might sell its share to ARN, in the wake of gaining new licences on the Sunshine Coast licence and in Brisbane.
APN have shares jumped to some of their highest levels for several years after the profit announcement. The company will pay an 8c dividend and expects full year earnings to exceed forecast profit expectations.