MRN announces 25% earnings drop, foreshadows 65% profit fall

Macquarie Radio Network took a 7% hit to its share price today after announcing an expected 25% drop in underlying earnings from the second half of 2014.

In news that is not a good look for a company about to merge, an announcement to the stock exchange foreshadowed a 65% drop in profit (NPAT), compared with the previous corresponding financial period.

Abnormal changes of around $2 million for the the half year are expected to reduce reported EBITDA by around 65% as compared to the prior corresponding period.

In a statement that apears to indicate the company spent a lot of money to get its house in order for the sale, and to lock in long term talent contracts, MRN Executive Chairman, Russell Tate said: “Revenue gains of 3.7% from Sydney radio operations were outweighed by operative cost increases, in particular by costs associated with the relaunch of 2CH, costs associated with restructuring of the company’s sales force, talent contract renewals and increases in administration costs.”

Tate also noted that the costs increases in part reflect the company’s focus during merger proposal with Fairfax Radio Network.

VIew the stock exchange announcement here.

MRN is scheduled to formally announce its half year results for the period ended 31st December 2014 on 18th February, but, in keeping with the continuous disclosure rules of the ASX, it was required to make this announcement as soon as the company knew about it.

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