Cash-strapped Stuff admits defeat on ad-driven strategy to build broadband and power retailing profits to subsidise news, selling Stuff Fibre and rest of EnergyclubNZ
Cashing up: Admitting defeat in its drive to use free online advertising to create broadband and electricity retailing profits to subsidise its news, Stuff announced the sale of Stuff Fibre to Australian-owned telco Vocus and a management buyout of its stake in power retailer Energyclubnz. Sums were not disclosed by the cash-strapped publisher of the Dominion Post, the Press, the Waikato Times, myriad community newspapers and the Stuff.co.nz website.
Stuffed: This week its Australian owner Nine Entertainment rebuffed continued overtures from rival NZME to buy Stuff for NZ$1. BusinessDesk reported this week Nine told the Government it would close Stuff by the end of the month without Government assistance or intervention. The Government won’t comment.
Time to exit: Stuff Fibre was launched in 2016, originally on the Vocus platform. At the time, Stuff’s plan was to leverage the scale and reach of its various business units, including Neighbourly and newspaper brands, to expand the business and grow revenues.
Sub-optimal: Stuff acquired its initial stake in Energyclubnz in 2017 as part of a strategy of adding complementary services for its readers and subscribers. Stuff CEO Sinead Boucher said while the strategy had been effective, investments were regularly reviewed, with a view to determining “the optimal time to exit.”
Xero’s earnings nearly double: Xero has reported a $3.3 million full year net profit, a $27.1 million improvement from the previous year. The company’s pre-tax, interest and depreciation earnings rose 88 percent to $137.7 million in the period. Subscriber numbers increased by 26 percent to nearly 2.3 million and revenue rose 30 percent.
But wait: The accounting software firm warned that Covid-19 would hurt its 2021 result, given that many small and medium businesses, which make up a significant proportion of its customer base, may not survive the next 12 months. Xero shares closed down 4.8 percent at A$79.77.
Looking good: Dental group Abano Healthcare Group upgraded its profit view, saying 2020 operating earnings may be up to $3 million higher than previously estimated after the easing of lockdown restrictions on both sides of the Tasman allowed its full range of dental services to resume.
Raising guidance: Abano said the reopening of its clinics would help the last two weeks of the current financial year ending May 31. It now expected pre-tax earnings to be at the top end of its guidance range of between $17 million and $20 million. But it stopped short of providing guidance for the 2020/21 year. Abano shares closed up 0.9 percent at $2.35.
More cash on hand: Freightways agreed with its banking syndicate to borrow up to an extra $50m in cash, should it be required, as well as extending existing lending facilities that mature in 2021 for two more years. The trucking, courier and document storage firm said the extra borrowing would help it cope with Covid-19, as well as using shares instead of cash to complete its recent Big Chill acquisition.
Slowly improving: Freightways said revenue dropped by around 32 percent across its business units in April, but had subsequently improved both in volume and in the type of revenue. CEO Mark Troughear said that while it was pleasing to see its depots and couriers busy again under Alert Level 3, the future remained uncertain.
Quote du jour: “Not knowing what impact a weaker economic environment will have on our activity levels does make it difficult to project forward activity levels,” he said. Freightways shares closed up 3.6 percent at $6.89
Raising eyebrows: Virgin Australia may get a government bailout after all, but possibly not the one it might have been expecting. Australia’s second biggest airline, which filed for voluntary administration last month after failing to gain Federal government support, had received bids from several parties.
Surprise, surprise: One of the bidders was Queensland’s state government, where the airline is based. Officials announced the state could buy a direct equity stake or offer a loan or loan guarantee. With more than 10,000 employees and a further 6,000 workers indirectly employed, Virgin Australia is one of Queensland’s major employers.
Thought du Jour – Jacinda for Tourism Minister: Given her significant international profile right now, shouldn’t Prime Minister Jacinda Arden be seriously considering taking on the tourism portfolio? It’s the sort of clout the tourism industry desperately needs as it faces probably the most dire outlook in its history.
Prime Valet: Former PM John Key recognised the obvious synergies of combining the two roles as he trotted the international stage using the opportunities of appearances on shows like David Letterman to increase New Zealand’s profile. Expect the drum beat for Ardern to follow suit to start soon, particularly after serving an early apprenticeship collecting U.S. media celebrity Stephen Colbert from Auckland Airport last year generating plenty of valuable airtime as a result.