Fairfax Media has posted a 41% fall in net profit after tax to $96.7 million, which the media giant has blamed on tough advertising market conditions.
In the six months to 31 December, Fairfax's revenue of $1.23 billion was down 5% on the prior corresponding period.
Fairfax chief executive and managing director Greg Hywood believes the poor performance comes down to poor advertising conditions in NSW and Victoria and a downturn in Fairfax's major markets.
Hywood said: “While the results are disappointing, over the last six months Fairfax Media has driven change through the business and we have done it in the midst of a severe cyclical downturn in our major markets.
“It's no surprise that trading has been tough this half. We have had to contend with extremely poor advertising conditions in NSW and Victoria and no improvement in the subdued New Zealand market. Fairfax is particularly exposed to stresses in finance, retail and real estate sectors. However, we have derived benefit from the geographic and platform diversification of our business and continued with a program of change consistent with our strategy.”
In an attempt to improve the sustainable earnings of the business, Fairfax Media has achieved a reduction in publishing costs, down 4% on last year.
Fairfax Media's digital performance however was strong with revenue across the group increasing 14% on the same period last year.
Hywood said: “These businesses are now of significant scale, generating total sales of $189.8 million for the half year, and play a pivotal role in the success of our multi-platform strategy.”
Fairfax has announced a three-year plan to improve Fairfax's results in the future. The three year strategy called 'Fairfax of the Future' will change the mix of current expenditure.
Hywood said: “We will be changing that mix as well as reducing overall costs, through a variety of measures, including reducing print and increasing digital distribution; sharing content across platforms; centralising sales, systems and services; focusing on audience versus circulation; reducing duplication; partnering and outsourcing; increasing efficiency and flexibility; and building capability.
“We've completed the review of what can be achieved and have started the implementation of a three-year program. By the time the project is completed, we expect to have doubled the $85 million cost savings target outlined at our full year result in August to achieve run rate savings of $170 million.”
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