Fairfax sees revenue decline

Fairfax saw its total revenue fall 3.1 per cent for the FY, from $1.74bn to $1.69bn in its most recent results.

 

The company had a net loss after tax of $63.8m, compared to a positive result of $83.9m in the prior corresponding period (pcp), partly attributable to its decision to separate Domain, giving the profitable property publishing business its own ASX-listing.

 

EBITDA excluding significant items for the FY had a slight bump from the pcp, rising 1.2 per cent to $274.2m.

 

Reflecting a decline in print volumes, newsprint and paper costs fell from $92m to $82m, despite paper prices worldwide increasing over the year.

 

Fairfax notes Printing Australia had external print revenue growth of 14 per cent with new and returning customers. Revenue from external print work, which is completed on the company’s presses when they are not producing mastheads, grew by 12.5 per cent across the business, from $46.1m to $56.8m.

 

Greg Hywood, CEO, Fairfax, says, “Total revenue declined 9 per cent, with relatively stable contribution from Agricultural titles, benefiting from strong agricultural commodity prices and digital investment in the sector. This was offset by weakness in regional advertising and circulation, with some impact from the closure of several unprofitable mastheads.

 

“Declines in local and real-estate print revenue contributed to the advertising revenue result. Circulation declines reflected lower retail volumes.

 

“Over the past seven years, we have taken the big decisions. We have built businesses such as Domain and Stan. We have maximised the growth drivers of our core assets. We have addressed legacy cost issues to give our business time to adjust to the structural change it confronted. We have hit our stride going for growth.

 

“Our printing agreements with News Corp herald a new era of greater industry cooperation. The arrangement delivers greater cost variabilization, reduced capital intensity and further extend the cash generating life of print. We expect the combination of the new arrangements and the changes to Fairfax’s printing network to result in an annualised full-year benefit of approximately $15m. The financial benefits are expected to begin towards the end of FY19 H1.



“Fairfax is in good shape – and that is the reason Fairfax shareholders have the opportunity to benefit from a step-change in growth through the proposed combination of our company with Nine Entertainment Co.



“We have long believed that media consolidation provided enormous potential to leverage increased scale of audiences and marketing inventory to grow our assets. Fairfax has consistently supported media deregulation because we saw the long-term benefits for shareholders.

 

“If you look at the outlook for Metro, the result is excellent. That is based around print mitigation, improved digital programmatic revenues, and the outlook in the guidance is that we are getting revenue growth year-on-year. I do not think anyone was looking at the business seven years ago and expecting to see this result. It is a testament to the team.”

 

Fairfax has been cutting staff and sharing facilities to bring down print production costs, the FY report notes its Australian Metro Media segment dropped costs by eight per cent, with publication costs falling 9 per cent as a result of staff cuts, technology, and print production.

 

Its Australian Community Media business cut expenses by six per cent.

 

Domain saw its print revenue decline by 13 per cent, while dropping print expenses by 15 per cent.

 

The FY report confirmed the company’s expectations to save $15m in the upcoming FY from closing its Ormiston, and Beresford print sites, which will see 120 staff affected, a move which blindsided the AMWU in July.

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