The market liked Fairfax Media’s (FXJ) reasonable profit report yesterday, with a higher dividend, but the thumbs up wasn’t strong enough to return the shares to the year high of $1.07 reached in May.
The shares rose 6.2% to 94c yesterday on the news the company reported a profit of $224.4 million for the year to June 30, a figure that was boosted by $100 million worth of deals including the sale of the Stayz holiday accommodation business and InvestSmart. The shares were up close to 9% at one stage in early trading yesterday.
The result for the year to June 30 is a massive turnaround from the $16.4 million loss suffered a year earlier (after further write-downs). Impairments and restructuring costs fell to $33 million in the latest financial year.
Fairfax said underlying net profit – excluding significant items – rose 80% to $154.8 million.
The result was struck on a near 3% fall in total revenue to $1.99 billion.
FXJ 5Y – Stayz sale boosts Fairfax to $224m profit
In a brief comment on outlook, Fairfax Media said revenue was down 1% to 2% for the first five weeks of the 2014-15 financial year compared to a year earlier.
It doubled the final dividend to 2c a share fully franked, matching the interim dividend, making a total payout for the year of 4c a share.
The company reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for continuing businesses of $306.4 million for the year, excluding significant items, about 2% higher than a year ago.
The star for Fairfax was the real estate business Domain which increased its online revenue by 40.5% (against a sharp fall in Domain’s print revenues of more than 23%).
“We finished the 2014 financial year with a strong balance sheet which positions us well to build our current businesses and invest for the future,” CEO Greg Hywood said.
“Following receipt of proceeds from the sale of Stayz, we finished the year with net cash of $68 million, an improvement from net debt of $154 million at June 2013," he said. Net debt was trimmed by $222 million during the year.
Fairfax has paid down debt by around $1 billion in the past year and gross cash of $452 million on hand at June 30.
Stayz was sold in December for about $220 million and InvestSmart was sold in a year ago for $7 million.
Revenue at the publishing division Metropolitan Media, which includes The Australian Financial Review, The Sydney Morning Herald and The Age, fell 9.2%, thanks to a sharp fall in print advertising revenues to $803 million although the division recorded EBITDA up 41.3% to almost $121 million.
The company said this was driven by digital subscription revenue, profitable circulation strategy and cost initiatives.
Revenue fell 14% at the community media business, with EBITDA also down 17% to $152 million. EBITDA also fell 26% at the metropolitan radio business (4BC in Brisbane, 2UE in Sydney and 3AW in Melbourne) to $13.9 million on revenues down 6% to $104 million.
So is Fairfax out of the woods? Nope, but it has given itself a bit more time to continue readjusting to the ever encroaching digital world.
