Top Gainer: SevenWest Media (SWM)
Shares in SevenWest Media (SWM) soared 18.2% on Wednesday as the newly merged media conglomerate announced its annual results. Although results were largely in line with expectations and the company painted a less than rosy outlook, shares jumped nonetheless to be the day’s biggest gainer. Perhaps the market thought that the stock had been oversold after falling more than 50% in the last 6 months and 30% in the last month alone – to hit an 18-year low of $2.55 on Monday.
Shares in SWM surged after the company said it’s on track to refinance debt and to strengthen its balance sheet despite a tough advertising market. The broadcaster and newspaper publisher said it increased full year profit by 19.6 per cent to $115.1 million for the 12 months to June 30, from $96.2 million a year earlier, while revenue increased 77.6 per cent to $725.69 million, from $408.69 million.
The result includes 12 months of West Australian Newspaper Holdings figures and two and a half months of Seven Media Group figures after West Australian Newspapers Holdings acquired Seven Media Group in April.
The announcement came amid warnings of an uncertain and tentative outlook following a tough start to the new financial year. Seven West Media Chief Executive Officer David Leckie said Seven West would enhance the performance of its media businesses and strengthen its balance sheet as it confronts an “uncertain and tentative global economic outlook” over the next 12 months. “We’re well-positioned to take advantage of the advertising market, however it unfolds,” Mr Leckie told analysts in a briefing on Wednesday. “We’ve got a strong deep management team, by far the best, that has delivered on its commitments and finally, contrary to what you might hear, we are on track for refinancing our debt.”
However, he conceded that July and August had been “very tough months” for the company. “There’s no question that the advertising market’s tough,” he said. “We’ve seen a little bit of strength in the last quarter… but compared to what we saw a while ago, I’m feeling a bit better.”
Seven West said it had started re-financing all existing components of group debt and plans to complete the process this calendar year. The company had net assets of $2.511 billion and $232.8 million in available undrawn facilities at June 25. The company also said it is undertaking a “transformational whole of business cost review”.
Two of the company’s major shareholders, Seven Group Holdings and Kohlberg Kravis Roberts & Co, have committed themselves to the company’s dividend re-investment plan.
Based on Thomson Reuters data, ten analysts have a buy on SWM, four have a hold, with just one sell.
Chart: Share price over the year to 22/08/2011 versus ASX200 (XJO)
Stock code: SWM
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