APN Outdoor downgrades guidance, warns of market weakness

Shares in the advertising firm have slumped more than 30pc following a modest downward revision to full-year guidance.

Richard Herring CEO APN Outdoor.

Advertising company APN Outdoor was on the receiving end of a brutal market $400 million sell-off in morning trade after it downgraded its guidance for the full year.

The unexpected revision came as the group warned of weakening market activity at its half-year results, with its valuation slashed by a third in response.

Despite the disappointing outlook, the ASX-listed APN Outdoor (APO) booked a 49 per cent jump in profit to $19.5 million for the six months to June 30 on the back of a 10 per cent lift in revenue to $150.6m.

The group’s pre-tax earnings, which it uses as the benchmark for guidance, rose 31 per cent to $34.8m.

In a statement to the market, APN Outdoor said the positive momentum in the outdoor advertising market through the first half had taken a turn for the worse as advertisers shifted their attention to the Olympics.

“Our revenues and earnings are weighted to the second half of the year,” the group said.

“We have seen a significant reduction in market activity in recent weeks for the September to November period which has arisen, at least in part, from a combination of an extended national election process closely followed by the Olympics.”

The softer market has forced the company to downwardly revise guidance for revenue growth for the full year to 6-8 per cent, from 8-11 per cent previously.

The advertising group also lowered pre-tax earnings expectations from a range of $84m-$88m to a range of $79m-$84m.

APN Outdoor delivered a fully franked interim dividend of 6.5c a share, up 44 per cent on last year.

At 10.35am (AEST), APN Outdoor shares traded down 31.4 per cent at $5.65.