Fairfax saw a net loss after tax of $63.8m, while the company generated a revenue of $1.6bn for FY18, declining 3.1 per cent from $1.7bn in the prior corresponding period (pcp).
Earnings before interest, tax, depreciation and amortization (EBIDTA) came in at $274.2m for the full year, up 1.2 per cent from the pcp, while EBIT was was $217.4m, down 5.6 per cent from $230.3m in the pcp.
Fairfax made a net profit after tax (NPAT) of $124.9m, down 12.4 per cent. The company’s loss of $63.8m contrasted with a profit of $83.9m in the pcp.
Net printing revenue, which flowed in from external print work, other than the group’s own publications, came in at $51.8m, up 12.5 per cent from $46.1m the year before. Printing Australia saw external print revenue growth of 14 per cent, with new and returning customers.
Group digital revenue continues to grow, in the past year it was $479m, taking up 28 per cent of total revenue. The year before, it occupied 25 per cent.
Earnings per share were 5.4 cents, down 12.4 per cent from 6.2 cents the year before. Significant items after tax totalled a $188.7m loss.
Greg Hywood, CEO and managing director of Fairfax says, “Today’s result shows the strong position of the Fairfax Media portfolio. Each of our businesses has maintained a growth focus and delivered good cost outcomes which will underpin future performance.
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“Our three publishing businesses are emerging from a period of great change. Each is profitable, generating valuable cash flows and positioned with distinct markets, products and strategy to leverage growth. What they have in common is an ongoing emphasis on digital publishing, continuing focus on cost and efficiency, initiatives to maximise print earnings; and a focus on developing new revenue opportunities.
“For the year, Domain delivered strong digital growth despite recent cyclicality in the property market. Metro has achieved its second consecutive year of EBITDA growth with print showing signs of stability and digital advertising growth in H2.”
Real estate listings company Domain Group generated a total revenue of $357.3m for its first full year operating as a separate ASX entity, up 11.5 per cent from $320.3m in the pcp. Its EBITDA of $117.6m, increasing 3.9 per cent from $113.1m.
Digital was the main driver of its growth, as in print, Domain’s revenue fell by 12.6 per cent, to $77.1m, down from 88.3m. Its EBITDA in print slipped by 5.2 per cent to $20m from $21.2m, while its EBITDA margin increased to 26 per cent from 24 per cent. Although Domain’s total expenses grew by 15.7 per cent to $238.3m, its print expenses declined by 14.9 per cent.
In newspaper publishing, the Metro segment made sales of $490.2m, down 6.1 per cent from $522.2m, although its earnings went up, with EBITDA of $53.1m, increasing 8.3 per cent from $49.1m the year before. Advertising revenue came in at $203.9m, down 9.6 per cent from $225.5m in the pcp, while circulation attributed for $220.1m, slipping 3 per cent from $226.8m.
Hywood says, “For Metro, the result is quite excellent and it is an outcome of print mitigation, improved digital performance in advertising and subscription growth. For the outlook, we are expecting growth year on year.
“Metro expenses declined 7.5 per cent for the year, with a 9 per cent reduction in publishing costs largely from savings in staff, technology and print production.”
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ACM suffered the most out of the company’s Australian publishing sectors, with sales going down 6.5 per cent, to $400.2m from $428.2m in the pcp and and EBITDA of $57.2m, dropping 21.6 per cent from $73m the year before.
Regional advertising revenue went down 11 per cent to $211.3m from $2337.3m in the pcp, while circulation revenue fell by 10.6 per cent to $60.1m from $67.2m. The company saw the closure of six Community titles and one specialty magazine in the past year.
On ACM, Hywood 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.
“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.
“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."
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