Fairfax Media will pay a modest interim dividend to shareholders, sending a message that it’s increasingly confident the tough times are behind it.
The payout of 1.1c a share is down from the reduced 2c interim payment a year ago and no final dividend for the 2009 year.
Seeing the company earned just over 6c a share, there’s room for the payment to shareholders to resume.
The company’s shares rose yesterday, closing up 2c at $1.805. They had spent much of the day drifting, just in the red after the release of the interim results.
More positive commentary from the company management made the decision to lift the dividend easier to understand.
CEO Brian McCarthy said in a statement to the ASX yesterday:
"Trading during the important November/December period showed definite improvement against last year. December 2009 advertising revenues were approximately 2.5% higher than December 2008, the first time in over 12 months that a previous corresponding period gain had been achieved.
"When compared to the second half of the 2009 financial year, all areas of the Company saw revenue and profit gains in the first half of 2010."
"Trading for the first six weeks of the second half has been stronger than for the same time last year.
"Whilst this is encouraging, revenue visibility and booking cycles remain quite short with no sustained trends evident.
"Revenue growth is being experienced across the majority of media and digital operations but the New Zealand publishing market has remained subdued.
"Based upon current market trends we anticipate earnings growth in the second half compared to the same period last year."
With 9% of the company, John B Fairfax will be happy at the resumption of dividend payments, no matter how small.
Seeing second half earnings in 2009 slumped as revenues plunged 25%, a rise in profits this half should be very easy.
But the company still has a long way to go.
The company’s digital business was the only part of the group to perform in the six months to December.
In fact, had it not been for a 11% rise to $53.1 million from $47.7 million in earnings before interest and tax by the online business, Fairfax earnings would have been weaker than the reported 11% fall in underlying profit to $323.4 million from $362.6 million.
The online business was the only part of the business to enjoy higher revenues, up 8.1% to $108 million.
All other parts saw falls from 0.5% (for the radio stations) to 19% for Australian and NZ printing and 12.8% for the Specialist Media business (which includes the Australian Financial Review, BRW and other titles from the old Rural Press).
With the impairment expenses, the company had a net loss in the December half of $375 million after Fairfax had cut asset values in the same half of the previous year, which plunged the company into a deep loss.
Unlike the Seven Network yesterday, which reversed some of its impairment charges taken a year ago against the value of its holding in West Australian media, Fairfax decided not to follow that lead.
Fairfax’s broadcasting business (AM talk stations like 3AW and 2UE), saw an 8.8% rise in earnings before tax and interest to $15.8 million, thanks to cost cuts and not higher revenues.
The newspapers and other media interests here and in NZ again saw EBIT fall: 27.8% for the Age in Melbourne and the Sunday Age and the Sydney Morning Herald and the Sun Herald in Sydney. Specialist Media, which includes the AFR, saw a fall of 8.8% in EBIT for the half to $36.3 million.
The 2009-10 first-half result was stronger than the average forecast of $132.6m of analysts polled by Dow Jones.
"We have extensively re-engineered the company to ensure that all our businesses are operating much more efficiently," chairman Roger Corbett said in the statement to the ASX.
"On a continuing like-for-like businesses basis revenue declined 9.2% and EBITDA was down 10.8% on last year.
"Earnings per share of 6.1 cents versus a loss per share of 23.1 cents last year.
"Positive operating cash flow of $225.8 million. Net debt reduction of $170.2 million," Mr Corbett said.
