The fortunes of Fairfax have swung dramatically, with the media giant posting a net loss of $893.5 million for the 2016 fiscal year, following an $83.2 million profit in FY15.
Fairfax revealed today that its underlying net profit decreased by 7.6 per cent to 132.5 million in the 12 months to 30 June, with overall revenue falling 0.6 per cent to 1.83 billion.
The group’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were down 1.4 per cent to $283.3 million.
Fairfax CEO Greg Hywood said the results are proof that the company’s transformation over recent years has succeeded.
“The stable top-line revenue and EBITDA make it clear that we have reshaped this company into a high-value, broadly-based, digital-rich business,” he told shareholders.
“The flat top-line is despite an 11 per cent decline in group publishing revenue in the second half. Digital and non-print earnings now constitute more than 40 per cent of Fairfax’s EBITDA.
“On current trends, next year this will be closer to 60 per cent, reflecting the continued growth in digital and non-print earnings.”
Fairfax’s Australian metro media segment, which includes The Sydney Morning Herald, The Age, and The Australian Financial Review, saw a 5 per cent drop in revenue and a 45 per cent decline in EBITDA over the 12-month period.
The metro segment’s advertising revenue slipped by 15 per cent, which Hywood said was impacted by weakness in the retail, communications and finance categories, and was somewhat offset with ad revenue growth of 36 per cent from digital ventures.
Furthermore, Fairfax’s Metro publishing costs declined by 4 per cent.
“In metro, as I spoke in detail about publicly in May, we are delivering a new model with enhanced digital and targeted and differentiated print propositions,” Hywood said.
“We have substantially reduced the risks associated with metro through the removal of $400 million of annualised structural costs over the last four years.
“The publishing innovation taking place in metro is as sophisticated as anything happening anywhere else in the world and will underpin its future.”
Fairfax chairman Nick Falloon conceded to shareholders that the metro segment is developing a plan for “enhanced 24/7 digital and reduced print frequency”, following a leaked email from a Fairfax executive which revealed that the group’s print focus will now be on its weekend titles.
Meanwhile, Mr Hywood described Macquarie Media’s FY16 performance as “excellent” and reflective of the successful merger between Fairfax Radio Network and Macquarie Radio Network in March 2015.
“Cost and operational synergies underpinned the 28 per cent growth in revenue and 80 per cent increase in EBITDA, with margins expanding from 13 per cent to 18 per cent,” he said.
“We are confident that the benefits of the merger will continue to underpin its performance.”