SEVEN West Media will take the scalpel to parts of its business as it struggles to keep costs under control amid a sluggish advertising market and tough trading conditions.
Costs will be extracted from its magazines, back office functions, its newspapers in Western Australia and news and current affairs TV programs as rising costs hit earnings in the year to June 30.
A 5 per cent rise in costs - in particular at its biggest earner, the television division - forced down earnings by almost 14 per cent to $47 million. Seven West Media's recently appointed managing director, Don Voelte, said the company would be ''relentless in its pursuit of efficiencies''.
''We are focused on greater efficiencies across our business to manage our costs to deliver market-leading margins, but we will not do so at the expense of quality,'' he said.
Mr Voelte, the former Woodside chief who took over from David Leckie in June, said revenue remained ''challenging''.
His chief sales officer, Kurt Burnette, said the ad market was unlikely to improve until the final quarter of the year when retailers, banks, entertainment and car manufacturers are expected to come back into the market. ''We remain cautiously optimistic,'' he said.
Net profits soared to $226 million, and revenue from the newly enlarged group also rose sharply to $1.9 billion from $725.7 million. The results were the first 12 months complete trading for the company after the acquisition of Seven by West Australian Newspapers Holdings in April last year.
Revenues at its TV division rose by 2.7 per cent to $1.1 billion off the back of strong programs such as My Kitchen Rules and its AFL coverage. But that increased investment in AFL - Seven outlaid $425 million in cash and $50 million in contra over five years - pushed costs up by 9.3 per cent and hit earnings, which fell by 14.5 per cent to $291 million.
Revenues at West Australian Newspapers and its regional titles fell by 5 per cent to $348 million and earnings by 16 per cent to $116 million. Magazines experienced a 5.8 per cent drop in revenue to $287 million and earnings fell by 8.5 per cent to $40 million.
Seven declared a fully franked dividend of 6¢ a share, down from 26¢ a year earlier.