NZME has reported a steep 76 percent drop in first-half net profit. Photo: RNZ / Brad White
Media company NZME has reported a steep 76 percent drop in first-half net profit, as tough economic conditions take a big bite out of advertising revenue.
Key numbers for the six months ended June compared with a year ago:
- net profit $2m vs $8.5m
- revenue $166.2m vs $173.2m
- underlying profit $21.3m vs $28.1m
- interim dividend 3 cents per share vs 3 cps.
"With New Zealand in economic recession for the first time in a decade, the impacts of inflationary pressures, weak consumer and business confidence, and a depressed real estate market have all contributed to lower revenue for NZME in the first half of 2023," Chief executive Michael Boggs said.
NZME's overall advertising revenue fell to $116.4m, down about $10m or 7 percent compared to the year earlier.
Boggs said there had been reductions in real estate, government and retail advertising, while travel advertising had not yet returned to pre-Covid levels.
"Advertising revenue across our audio business was largely flat, year-on-year, but with a pleasing 28 percent growth in digital audio revenues," Boggs said.
"Despite the challenges we've continued to diversify the content on offer across our digital platforms - be that through audio, publishing or OneRoof, so we can grow audiences and continue to deliver results."
Given current trading conditions, NZME expected to operate at the lower end of its net debt range and would reduce capital spending in the second half.
Higher interest rates saw finance costs rise by 27 percent in the first half over the year earlier.
Boggs said there were signs of recovery in overall business confidence, and interest rates were peaking, with positive signs for its OneRoof advertising business as real estate sentiment also improved.
"2023 will be influenced by many things, especially the New Zealand election, the Rugby World Cup and the partial recovery of the real estate market," he said.
Based on current performance, NZME expected full year underlying profit to be at the lower end of its $59m to $64m range.