Fairfax signals 'consolidation' in media as it posts profit slump

Rosie Baker
By Rosie Baker | 21 February 2018
Greg Hywood

Fairfax has reported a dramatic fall in bottom line profit but CEO Greg Hywood was at pains to point out that it is a better result than the headline figure suggests.

Its statutory profit dropped 54%, which includes the impact of significant items, $38.7 million loss, which is attributed to the write down of printing and radio equiptment. 

Underlying net profit after tax (excluding significant items) fell 10% to $76.3 million.

EBITDA, which represents earnings before interest, tax, depreciation and amortisation and is a key measure for analysts and shareholders, inched up 1.3% to $146.9 million.

Revenue fell 4% to $877 million across the group, and it cut costs by 4%.

Hywood says: “This is a good result we are presenting to the market today. It shows the solid performances of our businesses – virtually across the board – and demonstrates the strength of the Fairfax Media portfolio.

“Fairfax is strongly positioned due to the success of growth and transformation initiatives we have implemented over the past five years. Domain’s digital growth is continuing; Metro publishing has delivered increased earnings; the radio business is showing the benefits of the merger; and Stan is going from strength to strength.

“For the half-year, the Fairfax Group delivered operating EBITDA of $146.9 million, an increase on the prior year. This reflected the strong performance of Domain and Macquarie Media, and extremely good cost outcomes in Australian Metro Media.”

Domain remains the jewel in Fairfax's crown, despite the recent upheaval at the top.

It delivered a 2.2% rise in EBITDA to $58 million, 22% growth in digital revenue during,while print revenue fell 12%.

Total revenue increased 12% to $183.3 million.

Stan and Macquarie Media, in which Fairfax has significant stakes are both “delivering strong performance and driving value” with Stan nearing one million subscribers (930,000).

Metro Media “remains in good shape” Hywood says, despite a 15% decline in advertising revenue. He says the fall was offset by an 11% reduction in costs.

Digital subscriptions for its Sydney Morning Herald, The Age and Australian Financial Review mastheads delivered their strongest uplift in four years, surpassing 283,000.

Community media revenue declined 9%, while digital revenue increased 20%

Fairfax says that it is in continued “positive” talks with rival News Corp over collaborating on printing and distribution operations to potentially save on costs.

Hywood says: “Metro’s next-generation publishing model is delivering a step-change for consumers with the launch of new websites and apps to grow engagement and drive subscriptions and revenue.

"Strong foundations for advertising growth have been established including via a world-first sales and technology partnership with Google to meet the growing demand for premium programmatic inventory. Print earnings are being maximised.”

Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop me a line at rosiebaker@yaffa.com.au

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