Fairfax Media posts A$401M loss after writing down mastheads, sees no pick-up soon
Aug. 26 (BusinessDesk) – Fairfax Media Ltd., the newspaper publisher whose shares have shed 43% of their value in the past six months, posted a full-year loss of net A$401 million after taking one-time charges to write down the value of its titles.
The loss compares to a profit of $270 million a year earlier and reflects writedowns of $651 million on the value of mastheads, customer relations and goodwill, the Sydney-based company said in a statement today.
Sales fell 0.6% to $2.47 billion, with the biggest decline coming from New Zealand media titles with a 5.7% decline to $360.5 million.
The company has been slashing costs and said today it would press on with cost-reduction programmes to try to offset the slide in revenue, with savings of at least $85 million targeted over the next two years. It also announced the sell down of Trade Me, the profitable online trading site it bought for $700 million in 2006.
“Visibility in advertising markets still remains opaque and general economic trends do not give us confidence that we will see any significant rebound in revenues in the current half,” managing director Greg Hywood said. “Fairfax is aggressively responding to structural changes in the media landscape while also dealing with the challenges of a prolonged cyclical downturn.”
Like media groups worldwide, Fairfax has seen its newspapers including the Sydney Morning Herald – once referred to as ‘rivers of gold’ for their advertising revenue – lose sales as consumers turned to the internet for their news and information.
The writedowns add to the A$513 million impairment it took in 2009 against mastheads and goodwill that resulted in a loss that year and saw the company's credit rating cut below investment grade to BB+.
Fairfax Digital and Trade Me were the stand-out
performers in the latest year,
with revenue gaining 10% to A$234 million and earning before interest, tax, depreciation and amortisation gaining 6.6% to $118 million.
By contrast, Metropolitan Media, which includes its Australian daily newspapers, reported an ebitda decline of 19% to A$83.3 million. New Zealand Media, including titles such as the Dominion Post, The Press, the Waikato Times and Sunday Star-Times posted an 11% drop in earnings to $67.6 million.
That saw total ebitda decline 5% to $607 million.
Fairfax suffered a deterioration in the second half as “more subdued consumer confidence led to advertising and other revenues being 3.1% below the corresponding half last year,” the company said. “Circulation revenues were also affected with total circulation revenue down 5.3%.”
The company will pay a final dividend of 1.5 cents a share, bringing total payments for the year to 3 cents, up by a fifth from 2010.
The stock last traded at 77.5 Australian cents yesterday. It is rated a ‘hold’ based on the consensus of 13 recommendations compiled by Reuters. Within the range were three ‘buy’ ratings, two ‘sells’ and three of ‘underperform.’