Fairfax revenue drop despite digital success

Fairfax Media has a larger audience than ever but is still struggling to commercialise its publishing offerings, despite bolstering its earnings with new revenue streams, according to its half year results released today.

The company reported a net profit after tax of $26.3 million for the half year to December 2014, with a profit after tax of $86 million for continuing businesses, down 0.6 per cent from $86.4 million in the corresponding period last year. Earnings per share were 3.7 cents, down 0.6 per cent.

However, total EBIDTA was $85.3 million, down from $291.1 million in the prior corresponding period. EBIDTA for continuing businesses was $162.4 million excluding significant items, an outcome chief executive Greg Hywood described as “solid”.

Total circulation and subscription revenues for Metropolitan Media were up 2.3 per cent, with digital subscription revenues jumping by 61 per cent. The Sydney Morning Herald continues to be Australia’s most-read newspaper, with 5.1 million print and digital readers and a 13 per cent year on year increase in digital subscribers for 2014. The Age recorded a 15.2 per cent jump year on year, with both mastheads having around 135,000 digital subscribers.

Print declines in Metropolitan Media eased, dropping 10 per cent in the half compared to a 24 per cent fall in 2014.

“Our Metropolitan Media business is serviced by a flexible and fully utilised printing operation following the closure of Tullamarine and Chullora print sites in 2014,” Mr Hywood said.

“The re-scaling of our printing operations for efficiency – and the adoption of new ways of delivering our journalism and content – has helped sustain our publishing profitability.”

Australian Community Media was undergoing transformational change, he said, with adjusted EBIDTA declining 31.4 per cent to $56.6 million and total revenue down 7.4 per cent.

Targets for the cost savings strategy introduced last year, which saw a process of decentralisation begin across the ACM network, has been ramped up from $40 million to $60 million.

Fairfax New Zealand saw strong results in the digital sector with digital revenue growth of 25 per cent, with Stuff.co.nz’s unique audience jumping 18 per cent year on year in January 2015.

An 18.8 per cent drop in EBIDTA was the result of investment in digital product development and marketing, as well as one-off printing transition expenses. The NZ business weathered tough economic conditions with advertising revenue down by 6.2 per cent.

New revenue streams boosted profits for Fairfax, with its events business growing by 35 per cent, reflecting “strong organic growth” and acquisitions.

Domain also went from strength to strength following investments and acquisitions including full ownership of Metro Media Publishing earlier this year, with digital revenue up 37.8 per cent. Agent subscribers increased by 20 per cent, listings 16 per cent and visits to real estate sites jumping 19 per cent.

Fairfax also announced today a plan to buy back 5 per cent of its ordinary on-market shares, a total of 121 million shares, as part of the company’s ongoing management strategy. It is expected to commence on March 23.

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