Oz's Seven forecasts rough seas ahead
Profit warning comes amid volatility in the marketsSYDNEY -- Kerry Stokes' Seven Network Ltd., owner of top-rated broadcaster the Seven Network, on Monday warned that its pretax profit for the first half of the current fiscal year could fall by up to 50%, thanks to volatility in the stock markets and weakness in Australia's advertising market.
"Given the volatility in markets, it is practically impossible to reasonably forecast the earnings for this current half (ending in December), but it is likely that the profit before tax (including significant items) will be approximately 40%-50% below the corresponding period," Seven said in a statement to the Australian Stock Exchange.
That's based on losses in its investment portfolio of AUS$14 million ($11.5 million) as well as weakness in advertising markets, the company said.
As Seven issued its profit warning, industry forecasters the Commercial Economic Advisory Service of Australia said that TV ad revenue in the first half of calendar 2008 grew 2%. That was well below overall ad revenue growth in Australian media of 6.4%, to a total of $6.7 billion ($5.5 billion) for the half. However, analysts have forecast overall market growth of just 5.1% for the full year.
Seven's statement came as part of an announcement that it has received shareholder backing to buy back up to 40 million shares.
The network's annual general meeting of shareholders is scheduled for Nov. 10, when "the company hopes that market volatility will have reduced by that time to allow a meaningful update to be provided."
Last month, the company reported an annual net profit of AUS$141.6 million, down 91.3% before due to the changes in the company's structure following the formation of the Seven Media Group joint venture in 2006 with private equity firm Kohlberg Kravis and Roberts.