Next Media net up fourfold to $440m
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Taiwan operation turns first profits but growing competition in Hong Kong sees advertising revenue fall in second half
Next Media, publisher of Hong Kong's popular newspaper Apple Daily, yesterday said its net profit more than quadrupled to $440 million for the year ended March as its loss-making Taiwan operation finally turned a profit.
Turnover climbed 13 per cent to $3.32 billion. Still the results fell at the low end of analysts' expectations which ranged between $440 million and $458 million. Earnings per share on a fully diluted basis were 18 cents, up 350 per cent. The company declared a final dividend of 18 cents per share.
Competition from free newspapers and a price war initiated by rival Sun may account for a 3.4 per cent decline in second-half earnings to $216 million, from $224 million.
Most of the gain came from Taiwan, where the company publishes editions of Apple Daily and Next Magazine. Both recorded double-digit revenue growth compared with single-digit gains in Hong Kong.
'We are looking forward to reap even greater rewards from our Taiwan operation and the impressive growth of both titles will act as a springboard for more new titles and a larger market share on the island,' said executive director Stephen Ting Ka-yu. 'It will be the turnkey to the group's growth in the coming year.'
The Taiwan operation recorded its first-ever profit in the period though no details were provided. For the six months to September last year it posted operating losses of $5.1 million.
The three-year-old Taiwan Apple Daily saw advertising leap 52 per cent over the previous year to $700 million. Circulation grew 4.8 per cent to 527,609, making it the island's best selling daily last year.
Further gains may be tougher to attain. Analysts reckon the market will become much more competitive if the operator of Taipei's subway system puts the right to distribute a free daily up for bidding. Several Hong Kong publishers have already expressed interest.
In Hong Kong, Apple Daily faced tough competition from rivals such as Oriental Press Group, publisher of the city's largest circulation paper, Oriental Daily News, and the Sun, and from three free dailies. The paper's revenues slipped 2.7 per cent to $1.16 billion from the same period a year ago.
The two new free papers, Sing Tao News Corp's Headline Daily, which by one measure is now the city's third-best read daily after Oriental Daily and Apple, and property agency boss Shih Wing-ching's am730, posed significant threats. A 50 per cent cut in the price of the Sun in October also hurt, although the combined effect on Apple Daily may have been less serious than expected.
'The impact was overestimated and it was manageable,' a company source said.
Advertisers said Apple Daily was able to avoid cutting advertising rates even though its circulation fell 40,000 copies a day to 300,000.