Fairfax increases profit while print decreases

Fairfax has recorded a 12.1% increase in profit after tax for the six months ending December 2013 up from $83.1 million in the same period last year, despite decreases in some print circulations and revenue.

During the six months of the measurement Fairfax sold off FRG Asia, InvestSMART and the Stayz Group businesses for a net proceeds of $221 million.

While print editions of Fairfax papers such as The Sydney Morning Herald and The Age showed circulation declines according to the latest Audit Bureau Circulation (ABC) results, chief executive and managing director, Greg Hywood said the papers “yield improvement”.

“Our focus on profitable circulation has led to a 9.6% increase in underlying circulation revenue for the half year, with digital subscriptions for The Sydney Morning Herald and The Age having commenced in July 2013, and yield improvement in print,” Hywood said.

“In early February, The Sydney Morning Herald and The Age had more than 116,000 paid digital subscribers, and an additional 100,000 eligible print subscribers who have signed up for digital access.”

Regarding the Australian community media (ACM) Hywood outlined the severe drought in the eastern states has attributed to Fairfax’s regional and agricultural mastheads revenue being down by 12.4%.

“Despite substantial cost reductions, underlying EBITDA was down 17.4%,” he said.

“We are making additional structural change in this business as we respond to the operating environment. A range of initiatives are already underway, and we’ve now brought them together in a coordinated review that will be completed later this financial year.”

Media in New Zealand didn’t fare much better either with Hywood pointing out the underlying revenues in Fairfax’s New Zealand businesses were down 4.3% (local currency).

“Advertising revenue received some benefit from local government elections while auto and property advertising stabilised. However, we saw weakness in a number of other categories, including employment.”

Of the results on the whole Hywood believes the company has shown “determination” in the transformation of the business.

“It is a credit to the skill and resilience of everyone at Fairfax that the company has recorded its first year-on-year increase in underlying EBITDA for continuing businesses since June 2010.

“We are running this business for profitability while improving the quality and depth of the content we produce. We have made decisions to balance revenue and cost with a focus on growing profits on a sustainable basis.”

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