WEST Australian Newspapers has warned its profit could fall by close to a quarter this year because the global recession had put an end to the mining boom, hurting employment classifieds and other advertising.
The publisher expects its net profit in the year to June to come in at between $93 million and $98 million, down from its previous guidance of up to $108 million three months ago. That compares with earnings of $121.9 million last year.
WAN cut its forecast after posting a 34 per cent slump in third-quarter earnings to $19.2 million and saying it expects similar earnings for the final three months.
“This has been a very difficult quarter, with further deterioration in the advertising market, particularly in the employment and real estate categories,” said its chief executive, Chris Wharton. WAN’s shares closed 9c lower at $4.87.
Pretax earnings at its flagship, The West Australian, which accounted for more than 90 per cent of operating earnings, fell 36 per cent to $28.8 million in the quarter.
Mr Wharton, who joined WAN in mid-December, has pledged to stem the newspaper’s circulation declines by restoring its reputation. He appointed the former News Ltd executive Brett McCarthy as editor in March after Paul Armstrong’s controversial five-year rein.
The change was already showing results, Mr Wharton said: “The content of the paper is being noted in a very favourable way.” Citing internal data, he said newspaper sales from January to March had picked up for the first time in eight years.
He said he believed the ad slump had reached a bottom as bookings were stabilising.
By Miriam Steffens
May 6, 2009
source: business.smh.com.au