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Fairfax first half profit slumps on one time charges, continuing Ebitda down 8.7%

Thursday 19th February 2015

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Fairfax Media reported little changed first half earnings of A$86 million, excluding the impact of A$56.6 million of redundancy and impairment costs that arose from the struggling trans-Tasman publisher and broadcaster's efforts to reinvigorate its future.

Directors announced a fully franked interim dividend of 2 Australian cents per share and a share buyback scheme to purchase as much as 5 percent of the firm's listed capital on-market.

Statutory profit for the period of A$26.3 million included A$38.3 million of restructuring costs and A$18.3 million of asset impairments, and was down from A$86.4 million in the same half the previous year. Earnings before interest, tax, depreciation and amortisation was A$85.3 million, compared with A$291.1 million in the prior period, although on a continuing business basis, Ebitda of A$162.4 million was down 8.7 percent on the prior period and was "the result that we had planned for," said chief executive Greg Hywood. "There are no surprises."

The Sydney based, ASX listed firm said its New Zealand print and online operations had "outperformed a weak local advertising environment, with advertising revenue down by 6.2 percent in local currency terms on the prior period."

Ebitda on New Zealand operations fell 18.8 percent because of one-off printing transition expenses, reflecting a transition to shared printing arrangements put in place with New Zealand mastheads published by APN News & Media, and investment in digital product development and marketing.

A similar trend was evident in Australia, where Fairfax sought to highlight that the rate of decline in advertising revenues had slowed by comparison with the first half of the previous financial year.

Print advertising revenue in the first half declined by 10.6 percent compared to a 24 percent decline in the previous comparable period, while digital subscription revenues showed 61 percent growth, with total circulation subscription revenues up 2.3 percent.

Total revenue for the group in the six months to Dec. 31 was A$943.3 million, compared with operating revenues of A$976.7 million before a A$106.7 million one-off in the prior period.

Expenses in the period under review totaled A$858.8 million, including A$74.1 million of one-off significant items. Shorn of that, ongoing operating expenses fell to A$784.7 million, compared with A$795.0 million in the prior period.

The only other comment in its official release about New Zealand operations, which now include sub-editing for many of the group's Australian newspapers and websites, was a note of "very pleasing" growth in digital revenues, which rose 25 percent, with the Stuff website gaining "18 percent unique audience" in January.

At the six month mark, net cash stood at A$37 million, down from A$66 million at the same time a year earlier, although managing director Greg Hywood said Fairfax retained "considerable flexibility to continue to invest, both in our existing businesses and by acquisition."

Since balance date, Fairfax has undertaken two significant transactions, buying the 50 percent of Metro Media Publishing Holdings (MMPH) it didn't already own in a cash and shares deal that cost A$18 million in cash, and cash proceeds of some A$78 million from the sale of 96FM to APN.

Hywood gave no new forward guidance but said publishing costs at MMPH had fallen 8 percent and its half year Ebitda had climbed 20 percent, while restructuring in its Australian Community Media division was now expected to deliver annual savings of A$60 million, a third higher than original estimates of A$40 million.

Fairfax plans to commence the buyback on March 23.

 

 

 

 

BusinessDesk.co.nz



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