Fairfax reports slide in net profit but shows underlying growth ‘for first time in eight years’
Fairfax has reported a net profit after tax of $83.2m, down from last year’s $224m, with revenue down 5.3 per cent to $1.86bn, with large growth in the Domain property business driving the result.
This year has seen massive changes for the publisher which have included taking full control of the Metro Media Publishing assets – which include Domain – a merger with Macquarie Radio Network for its radio division, and launching video streaming service Stan with Nine Entertainment Co.
Underlying profit after tax fell almost four per cent to $143.3m although the company reported an underlying revenue increase “excluding significant items” of 0.3 per cent to $1.84bn.
The significant items impacted the results by $60.5m compared to a gain in 2o14 of $66.7m. Operating expenses climbed 0.5 per cent on the back of a $39m investment in “growth businesses and ventures”.
Last year’s result for Fairfax was inflated because of a number of sales including its online travel business Stayz.
Chief executive Grey Hywood said the company achieved full year “top line growth” for the first time in eight years, helped by a 45 per cent increase in revenue from its Domain Group.
“We consider this to be a robust result,” he said. “Through organic growth initiatives and acquisitions in areas such as Domain and Events we are moving to a position where the growth in our digital revenue offsets the decline in print.”
Print advertising revenue in its Metropolitan Media division, which includes the Sydney Morning Herald, The Age and AFR, fell 0.5 per cent to $279.4m, a figure which includes Metro Media Publishing, of which Fairfax took full control at the start of the year.
Excluding MMP, print revenue fell 11 per cent, which Hywood described as a “moderation” compared to the 24 per cent fall in 2014.
Digital ad revenue meanwhile climbed from $179m to $220m, while digital subscription revenue increased 36 per cent with total circulation and subscription revenues rising one per cent.
However, the growth in its digital subscriber base for its SMH and The Age mastheads has slowed greatly.
Fairfax said it now has 159,000 paid subscribers across the SMH and The Age and admitted a figures of 158,000 quoted in February was wrong.
“That number was overstated due to an isolated reporting issue and we restate the February number to be around 152,000,” Hywood said.
Advertising revenue from Fairfax’s Australian Community Division fell nine per cent to $371m with circulation revenue down 4.5 per cent to $98m
The merged operation between Fairfax Radio and Macquarie Radio Network, a deal struck at the end of March, reported ad revenue of $104.m, up eight per cent with Hywood saying business is “on track to achieve targeted $10m to $15m in annualised benefits in FY16”.
Streaming service Stan was also “gaining traction”, Hywood said, with Fairfax reporting 300,000 “gross sign ups” as of August 3.
“The service is well on track to have 300,000 to 400,000 active subscribers by December this year,” he said.
Domain performance
Turning to Domain, Hywood described the division as achieving “powerful momentum” during the year with an increase in print revenue of 69 per cent to $69m and of 36 per cent in digital revenue to $154m.
“Print advertising growth benefited from the consolidation of MMP’s stable of glossy real estate-focused magazines in Victoria,” Hywood said. “MMP is a strong performer in the group with underlying EDITDA growing 50 per cent on a full-year basis.”
Hywood said its “substantial investment” in the Domain Group helped fuel “revenue acceleration”.
Revenue from its events division climbed 41 per cent.
“As we foreshadowed a year ago, we are investing in our growth businesses and ventures which include Domain, Life Media and Events, as well as Stan,” Hywood said.
The media firm said revenues in the first five week of the 2016 financial year are two to three per cent above last year with Domain revenue is up 3 per cent.
Steve Jones
