Fairfax profit reverses previous loss

Last updated 12:05 14/08/2014

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Financial Results

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Cost-cutting has delivered a Kiwi profit boost for trans-Tasman publisher Fairfax Media, owner of stuff.co.nz and the Dominion Post, offsetting weaker revenue.

New Zealand earnings before interest and tax for the year to June were $65.9 million, up 6 per cent on a year earlier.

Revenue eased 5 per cent to $398.9m.

The company said advertising revenues were hit by declines in employment and retail sectors, offset by strong performance in the agriculture and government categories, while real estate was stable. Circulation revenue also declined.

However, that was more than offset by a $25m drop in costs to $318.6m.

When converted to Australian dollars, the strength of the kiwi dollar meant Fairfax Media reported gains in both revenue and earnings from New Zealand.

Fairfax said it had experienced strong growth in New Zealand digital revenue, which would be a focus for the business in 2015.

A deal to print Fairfax newspapers at rival APN's Auckland plant, announced in June, would also affect the 2015 result.

Overall, Fairfax reported a net profit of A$225.2m ($246.8m), up from a loss a year earlier on write-downs of A$460m.

The profit included a gain of A$106.5m from the sale of businesses, including the disposal of the Stayz holiday website in December.

Group revenue was A$1.99 billion, down from A$2b in 2013.

Chief executive Greg Hywood described the result as heartening.

"Today's result underlines the ability of Fairfax to deal with the enormous structural changes impacting upon the industry."

Hywood said a highlight of the year's result was the performance of Fairfax's Metropolitan Media division, which includes newspaper titles the Australian Financial Review, Sydney Morning Herald and The Age.

Operating profit for the division gained 41 per cent to A$121m, with a print advertising revenue decline of 24 per cent partially offset by digital advertising revenue up 6 per cent.

Although underlying revenue fell, "digital subscriptions for the Sydney Morning Herald, The Age and the Australian Financial Review are making an increasingly significant contribution, generating total revenue of A$24m", said Hywood. 

Cash costs for the group during the year included redundancy costs of A$86.4m, down from A$96m for 2013.

The company announced a A2c final dividend, bring the full year payout to A4c a share.

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