Profits: GWA, SBC, EHL, SUL

By Glenn Dyer | More Articles by Glenn Dyer

Southern Cross Broadcasting, the metro radio and regional TV operator and TV production house, is confident an expected second half improvement in TV revenues will boost earnings after the flat first six months of the 2007 financial year.

The radio and television group reported a first half net profit of $31.6 million, up 10 per cent on the prior corresponding period but at an EBITDA level, the result was flat: $60.6 million against $60.8 million for the first half of 2006.

Group revenue for the six months to December 31, 2006 rose 0.5 per cent to $295.3 million as TV revenues in the Adelaide market fell five per cent and regional TV revenue was up two per cent (but stronger in states like WA and Queensland).

“The electronic media advertising market remains short-term and unpredictable, although there are encouraging signs of recovery, particularly across television,” the company said in its outlook.

“Our projected first quarter revenue for the March 2007 quarter shows growth for both television and radio.

“Accordingly, we remain optimistic of an improvement in the second half.”

And CEO Tony Bell said the company sees higher revenues from the finance and food and fast moving consumer goods segments in this half across the TV side of the business. The Ten Network is getting higher revenues based on its improved 2006 ratings performance while costs at NWS 9 in Adelaide will be lower with no AFL and a cut in the affiliation agreement with Nine.

As well the station will not have the impact of last year’s Commonwealth Games which distorted revenue in the last half of the June year and lifted costs.

“Within radio, we expect a continuation of the current solid performance from all of our radio stations,” the company said.

The Southern Star television production and distribution business was expected to trade consistently.

The company declared a fully franked interim dividend of 37 cents, up from 34 cents in the prior corresponding period.

The shares closed down at $15.81 but like so many companies, its immediate fate is in the hands of others: the Federal Government and its new media laws and the Macquarie Media group with its 14.9 per cent stake picked up in a raid late last year.


The contrast with the more established but faltering rival, Repco, was quite stark

Repco was barely profitable in the December half as it awaits a conclusive bid from a private equity group, the second in 10 years; Super Cheap Auto on the other hand experienced a strong surge in sales and earnings as all parts of the business kicked in, including the recently established boating, camping and fishing division.

Repco was hurt by a rapid store expansion now being unwound and the malaise in parts of its market for automotive products. SUL on the other hand has shrugged off the impact of the slow car business.

Car sales were stronger in the second half of 2006 (the first half of the 2007 financial year), especially small vehicles. Petrol prices fell and more people obviously had more confidence about buying a new car (or new used vehicle) or spending money on upgrades or parts.

Super Cheap said yesterday that first half earnings rose 51 per cent to $9.05 million for the half year to December 30, 2006. That was on an 18 per cent rise in group sales.

Repco’s fell sharply to around $6.5 million and the outlook wasn’t exactly rosy.

SUL raised its dividend by a third. But the market took the usual step of buying the hype and selling on the result. So the shares which had run up to a recent all time high of $4.20, eased to around $4.09, off 9c on Thursday, then tumbled a further 8c on Friday (in a bullish market) to close at $3.92.

In a statement to the exchange SUL directors said the highlights were :

· Group Net Profit after Tax at $9.0 million which was 51% higher than the prior comparative period;

· Group EBIT at $16.0 million which was 44.1% higher than the prior comparative period;

· Group Sales at $312.3 million growing by 18% over the prior comparative period;

· Net Debt increasing by only $1.9 million during the 26 weeks despite the $37.5 million investment in new and refurbished stores across the Group.

The Directors have declared an interim dividend of 4.0 cents per share, which is a 33% increase on the prior year interim dividend. The dividend will be paid on 4 April 2007 to shareholders who are recorded on 13 March 2007.

CEO Peter Birtles said in a statement that “At the start of 2006, we set ourselves an ambitious agenda of initiatives to build and strengthen our Group. Our team members have tackled these initiatives with their customary commitment and creativity and it is particularly pleasing to see their contribution rewarded with such a strong set of results.

“The improvement in sales performance at Super cheap Auto reported at the end of the 1st quarter was maintained during the 2nd quarter whilst BCF had a particularly successful half with strong underlying like for like sales growth augmenting the sales generated from new store openings.

“Our Group Logistics and Shared Services functions also made an important contribution to the overall result through reducing the cost of doing business.”

Group sales rose by 18 per cent to $312.3 million.

Mr. Birtles said the company would continue to expand the BCF business in existing markets in the second half, with plans to launch into markets across the southern states of Australia and into New Zealand during 2007/08.

Super Cheap lifted its interim dividend to four cents a share.


It was a similar story for bathroom products, garden care and building supplier GWA International as it has battled the sluggish home building industry and drought.

It now expects full year results to beat the 2006 figures, lifting first hal

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →