Fairfax Media has revealed a full-year net profit of $83.9 million, a figure chief executive Greg Hywood believes “shows Fairfax is in great shape”, as he detailed plans to separate real estate arm Domain from the main publishing business.
The profit compares to a $772.6 million loss in the prior corresponding period, and was achieved despite a 4.8 per cent drop in revenue to $1.74 million.
“Today’s result shows Fairfax is in great shape. We have delivered strong value for shareholders through growth and transformation initiatives,” Mr Hywood said.
“The strategy we commenced five years ago has successfully maximised cash flows of our publishing assets and, with that, built growth businesses in Domain and Stan.
“The company’s underlying performance, combined with our strategic and valuable asset mix; and balance sheet strength, allows Fairfax to step into the future with great confidence.”
Mr Hywood said he expected Domain to be trading as a separate company by late November. The company plans to retain 60 per cent of Domain, with 40 per cent distributed to Fairfax shareholders. “We consider this to be the appropriate level to achieve sufficient liquidity in the market to maximise value over time,” he said.
Domain delivered 19 per cent growth in digital revenue notwithstanding a difficult listings environment in the first half. The transition to a digital business weighed on Domain’s print revenue which declined 13 per cent for the year.
The metro publishing business, which includes mastheads The Age, The Sydney Morning Herald, and The Australian Financial Review, experienced a 21 per cent increase in digital subscriptions to 236,000. Each masthead recorded year on year growth.
Publishing costs for the metro business were reduced by 12 per cent, with second half reductions reaching 14 per cent because of the May restructure. Advertising revenue was down 17 per cent.
Total revenue for Australian Community Media declined 11 per cent in fiscal 2017. Net advertising revenue fell 10 per cent, reflecting national trends in classified advertising, closures and frequency changes.
Revenue from Fairfax’s digital ventures portfolio rose 4 per cent but, excluding one-offs, earnings before interest, tax, depreciation and amortisation rose 8 per cent.
Video streaming site Stan continued to grow its subscriber base despite price increases, nearing 800,000. The service, which is 50 per cent owned by Nine Entertainment Co, saw subscription revenue rise 150 per cent, exceeding operating costs.
Fairfax’s radio asset, Macquarie Media, broadly reflected market trends with revenue dipping 1 per cent.
Fairfax Media NZ’s digital revenue growth of 29 per cent was offset by lower print advertising returns, causing total revenue to fall by 7 per cent. Circulation revenue fell by 5 per cent, but stabilised in the latter half of the year. Operations costs improved by 6 per cent.
Mr Hywood also updated shareholders on the Fairfax/NZME merger, which will appear before the NZ High Court in October, following its rejection by New Zealand Commerce Commission in May.