2nd UPDATE: Seven Group Can't Decide on News Corp Bid for Consolidated Media Without Proposal; 2012 Net Profit Doubles

--Seven Group can't decide on News Corp.'s prospective A$1.97 billion bid for Consolidated Media in absence of proposal

--Group FY12 net profit more than doubles to A$165.9 million

--Company sees strong growth in industrial services

(Adds CEO comments, investor comment, share-price reaction)

 
  By Gavin Lower 
 

MELBOURNE--Seven Group Holdings Ltd. (SVW.AU) can't decide about selling its stake in Consolidated Media Holdings Ltd. (CMJ.AU) to News Corp. until News Corp. makes a proposal, Seven Group said Tuesday as it posted a doubling of net profit for fiscal 2012.

News Corp. has proposed buying Consolidated Media for 1.97 billion Australian dollars (US$2.04 billion). News Corp. owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal.

Seven Group has a 25% interest in Consolidated Media. It also owns heavy-equipment company WesTrac, the sole Caterpillar dealership in North Eastern China and Western Australia and New South Wales states. Seven Group has a 33% interest in Seven West Media Ltd. (SWM.AU) and investments in the Agricultural Bank of China.

Consolidated Media owns 25% of Australia's pay-TV company Foxtel, while News Corp. owns 25% and telecommunications giant Telstra Corp. (TLS.AU) owns the remainder. Consolidated Media also owns 50% of Premier Media Group, which owns and operates pay-TV sports channel Fox Sports, while News Corp. owns the other 50%.

Chief Executive Peter Gammell told analysts and reporters during an earnings conference call Tuesday that the company is yet to decide whether or not to accept News Corp.'s bid for Consolidated Media.

"It's hard to make a decision without a proposal. In the fullness of time I'm sure that News will come forward with some proposal and we'll give you our reaction at that time," Mr. Gammell said.

Seven Group has asked competition regulator the Australian Competition & Consumer Commission to review its own proposal to acquire all the shares in Consolidated Media it does not already own. The ACCC proposes to decide on Seven Group's proposal Sep. 13.

"That doesn't mean to say that we are going to buy it; it just means we want to know whether we can buy it then we'll make that decision as well," Mr. Gammell said.

Meanwhile, Seven Group Tuesday reported more than doubling its net profit for the year to June 30. Net profit was A$165.9 million, up from the previous year's A$70.4 million, helped by strong growth in its industrial-services division, Seven Group said in a statement.

Seven Group said underlying net profit excluding significant items was A$332.4 million, up 39%--which is above guidance in February that net profit before significant items would grow 20%-30%.

It said significant items included a gain of A$129.8 million from its sale of vividwireless and adjusting down the value of its holding in Seven West Media.

The company said its industrial-services division--which includes WesTrac, AllightSykes and 45% of Coates Hire--saw earnings before interest, tax, depreciation and amortization grow 65% to A$514.9 million.

The company said WesTrac's Australian division saw product sales in fiscal 2012 grow 82% to A$2.24 billion, fueled by expansion in coal and iron ore mining.

Rhett Kessler, portfolio manager at Pengana Australian Equities Fund, which holds Seven Group shares, said Seven Group's WesTrac results "exceeded everybody's expectations, even including most optimistic forecasts."

"As they sell more machines into the field, their business is building sustainable profitable growth," he said, noting after-sales servicing of active machinery provides a significant earnings stream for the company.

Investors welcomed Seven Group's results, with the company's shares at 0404 GMT up 4.6% at A$7.95.

Write to Gavin Lower at [e-mail]

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