News Corporation chairman Rupert Murdoch has warned that the company is entering an “increasingly difficult economic environment” but says its strong balance sheet will help it weather the storm.
News Corporation chairman Rupert Murdoch has warned that the company is entering an “increasingly difficult economic environment” but says its strong balance sheet will help it weather the storm.
News reported a 17% increase in net profit for 2007-08 to $5.61 billion, but expects profit growth will slow to between 4% and 6% in 2008-09 as the economy slows.
“The escalating price of energy, the contraction of real estate values, and liquidity and confidence issues in the finance sector, are creating economic shocks that will likely be felt by the vast majority of consumers in the US as well as in Europe and maybe elsewhere,” Murdoch said.
That warning appears to have got News Corp investors worried – the stock has fallen more than 3% in trade this morning. The share price has crashed more than 30%.
The News Corp result was boosted by strong contributions from the company’s 20th Century Fox film studio, European pay-TV business Sky Italia and international newspaper divisions.
The company’s introduction of hyper-targeted advertising, where ads are targeted based on information found in individual MySpace pages, is paying off, with the company reporting that 50% of ad orders now include some form of hyper-targeting.
Sleep therapeutics company ResMed posted a better-than-expected 66% jump in net profit for 2007-08 to $110.3 million, thanks to a 17% jump in revenue to a record $US835.4 million.
The result, which came after a year that saw increasing competition, a product recall and slowing US sales, thrilled the market and ResMed’s shares jumped 16% yesterday to $4.60.
Industrial conglomerate Hills Industries, home of the Hills Hoist clothes line, produced a strong result considering soaring input costs such as steel and fuel, with net profit increasing slightly from $52 million to $52.4 million. Revenue increased from $1.01 billion to $1.19 billion.
While the company admits tougher trading conditions could hurt the business, the diversity of its product range – which includes everything from electronics, healthcare and security products to ironing boards and trampolines – will help insulate it from the downturn.
Read more on profit results
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