Fairfax has reported a full year profit after tax despite a weaker than average Australian advertising market in the second half of the financial year. The company’s earnings before interest and tax remained steady at $425.5 m, its net profit after tax of $228.5 m equalling a 3.8 per cent decline from $237.6m in 2005. Additionally the Fairfax group results indicated an underlying trade revenue increase of 1.8 per cent to $1,907.8 m.
According to CEO of Fairfax, David Kirk, the company made strong progress in some of its key objectives, with a number of large acquisitions and a strong circulation and readership growth for all of its mastheads.
“Growth in publishing will be achieved by continued diversification into regional, business, and magazine publishing; further alignment of the cost base; and strong circulation and readership that help drive advertising revenues,” says Kirk.
“We made strong progress against these objectives over the past year with the acquisition of the Border Morning Mail, the Rodney Times, The Independent Financial Review, and the launch of Travel and Leisure and AFR Smart Investor,” he says.
Kirk says the company’s profit result was also helped by a stable growth in costs, to 0.9% and with cost growth falling in the second half of the year.
Strong growth in Fairfax’s Digital division saw yearly revenue of $96.4 m, up 75 per cent and a profit at the EBITDA level of $24.3 m, up from $6.6m in the 2005 financial year. Fairfax media in New Zealand and the Fairfax Business Media division (FBM), were also key areas of growth for the company.
“The rapid growth of our internet businesses is changing the overall growth and earnings profile of the company. Our integrated newsrooms have delivered us the clear number one position in news and information online, driving new streams of fast growing revenue and earnings,” says Kirk.
The strong profit results are encouraging considering Fairfax Australian publishing businesses recorded weaker advertising markets, particularly in NSW and Victoria, which offset growth from the company’s Magazine, Regional and Business Media operations. However these costs were well controlled and costs fell in the second half of the year.
Kirk says the positive profit result is part of a medium term plan to reshape the company, in order to increase further growth.
“Fairfax Media is being successfully reshaped for stronger earnings growth in the medium term. Our aim is steady growth in publishing and rapid growth in our internet businesses,” he says.
Fairfax paid a final dividend of 11.5 cents per share, representing an underlying payout ratio of 80 per cent and making the dividend the highest ordinary annual dividend paid by the company.
