New Zealand 'stands out' for Fairfax
Fairfax Media is increasing its share of the newspaper advertising market, which has helped push annual earnings up 3.1 per cent in New Zealand, despite tough economic times.
Trans-Tasman operator Fairfax said yesterday that earnings before interest, tax, depreciation and amortisation had risen 3.1 per cent to $191.6 million from its New Zealand operations, excluding Trade Me, in the year to June 29. Revenue rose 2.5 per cent to $592.8 million.
Fairfax is the parent company of a stable of newspapers that includes The Dominion Post, The Sunday Star-Times and The Press, magazines such as Cuisine, NZ House & Garden and TV Guide, and websites including Stuff and Businessday.co.nz.
Fairfax's online auction business Trade Me posted a 39 per cent rise in earnings before interest, tax, depreciation and amortisation for the year to June 29 to $70.1 million.
A profit target agreement made in 2006, when the Internet business was sold, means the original Trade Me shareholders get a $45.2 million bonus payment.
The wider Australian and New Zealand Fairfax group lifted profits 47 per cent to A$386.9 million (NZ$472.7 million).
Fairfax shares are down 40 per cent so far this year, compared with a 22 per cent fall in the S&P/ASX 200. Yesterday, Fairfax shares rose four cents to A$2.82, despite profit being close to expectations.
"No one can escape the down- draught of the whole market coming down, but we have performed better than our peers," chief executive David Kirk said.
Fairfax did not give a profit forecast for the coming year but Mr Kirk said the advertising market was feeling the effect of the economic slowdown.
"We have limited visibility on how well advertising markets will perform this half [year]," he said, adding that it was too hard to predict when the New Zealand or Australian economies would turn around, with New Zealand having a tougher time than Australia.
"We are managing the business for a tougher time," he said.
Group revenue rose 34 per cent to A$2.92 billion.
The group result was boosted by the acquisitions of Rural Press, the Southern Cross radio business, and television production and distribution firm Southern Star.
Fairfax's Australian publications include The Sydney Morning Herald, The Age and The Australian Financial Review.
Mr Kirk said the results highlighted Fairfax's successful diversification of revenue, investment in digital operations, and focus on operational improvements.
Fairfax New Zealand chief executive Joan Withers said growth in newspaper advertising market share had boosted the bottom line.
During the 2007 calendar year, Fairfax's share rose to 50.8 per cent from 50.3 per cent, based on Advertising Standards Authority figures, Ms Withers said.
And last week rival APN, owner of The New Zealand Herald, posted a 5 per cent half-year fall in revenue from its New Zealand national publishing operations, compared with Fairfax's 2 per cent revenue rise over the same period.
Analysts at Credit Suisse said that given the tough advertising conditions and weakened Kiwi dollar, the performance of New Zealand publishing stood out in the Fairfax group results.
Ms Withers said most commentators were predicting that the economy would come out of recession toward the end of the calendar year.
"The fundamentals of New Zealand's economy are good and you'd have to have a high level of optimism in the medium term that it's going to get significantly better."