Seven Group Holdings has upgraded earnings guidance thanks to a recovery in television advertising and stronger coal and iron ore markets in Western Australia, Queensland and China.
Seven Group Holdings group chief executive Peter Gammell told the company’s first AGM in Sydney yesterday that said underlying group earnings before interest, tax, depreciation and amortisation and net profit for 2010-11 now were expected to be about 15% higher than previously forecast.
That would follow the higher results from Westrac and Seven Network
.
The merger scheme booklets, released in February, forecast Seven Group would report EBITDA of $312 million and net profit of $187 million in 2010-11.
The company reiterated the guidance at its full year results in August.
The upgrade would put EBITDA around the $360 million mark and net profit over $200 million, all being well.
Seven Group Holdings is the media and earthmoving equipment company that was formed in April this year after Kerry Stokes brought together his mining and television interests under one roof in a $3 billion merger. Mr Stokes controls 66% of the merged company.
"We now expect WesTrac to exceed the forecasts outlined in the Scheme booklet and to deliver an EBITDA of approximately $240 million excluding any earnings from National Hire (consistent with the Scheme Booklet assumption),’’ Mr Gammell told the meeting.
The scheme booklet had forecast WesTrac to report EBITDA of $231 million in 2010-11.
Part of the improvement coming from the improved performance of Seven Media Group, where the Seven Network and Pacific Magazines are held.
Mr Gammell explained that as Seven Media Group is an associate of SGH, we have internally estimated the likely full year results as we did with the Scheme Booklet and currently believe that SGH’s share for this financial year could be $80 million.
"This estimate exceeds the forecasts at the time of the Scheme due to the strong recovery in the advertising market and now includes an allowance of $17 million for the temporary licence fee rebates that were not included in the Scheme Booklet assumptions due to the uncertainty surrounding the legislative process at that time.
"We are also pleased with our key shareholdings in two strongly performing media companies: Consolidated Media Holdings and West Australian Newspapers.
"As a result of the recent buyback at Consolidated Media, SGH now owns a 24% shareholding. This investment provides SGH with a growing presence in Pay TV through CMH’s ownership of 50 per cent in Premier Media Group and its 25 per cent holding in Foxtel."
Mr Gammell said WesTrac was performing well, ‘‘with a strong mining market driven by NSW coal and WA iron ore underpinning a positive outlook for the remainder of FY11.
Seven Group shares rose 9c to $7.70 yesterday.
They touched $7.83 yesterday, which is the highest they shares have been since floating on the ASX at the end of April, after the merger was completed.
