Fairfax posts A$380m loss, says ad revenue has bottomed

Earnings from Fairfax's papers in Sydney and Melbourne fell 46 per cent in the past year. Photo / Hawkes Bay Today

Fairfax Media has reported a full year loss and says a decline in advertising revenues appears to have bottomed, although a material recovery is yet to begin.

The media group reported a net loss of A$380 million ($470.18 million) for the year to June, compared to a net profit of A$386.9 million in the previous financial year.

Fairfax's net loss included A$664.3 million in significant items mostly related to a reduction in the carrying value of its mastheads.

The company is a major New Zealand publisher, with papers such as The Press, The DominionPost and the Sunday Star-Times. It also owns the Trade Me auction site. Its Australian newspapers include The Sydney Morning Herald and The Age.

It said today that underlying net profit fell 40 per cent to A$226.7 million.

Fairfax's earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 27.2 per cent to A$605 million, which was inline with its guidance for a result of A$600 million.

Total annual revenue fell 10.6 per cent to A$2.6 billion.

Fairfax managing director Brian McCarthy said trading results for the first seven weeks of the 2009/10 financial year indicated a decline in advertising revenues appeared to have bottomed.

"June, July and August have all been going along at that same level," said McCarthy during a teleconference on on Monday.

However,said the company was not seeing a material recovery in advertising demand at this point in time.

"If others are seeing it, we're not prepared to say we're seeing it," he said.

"I think it's too early to say that."

The depth of the global and domestic economic slowdown, cuts to discretionary advertising and the challenges in the online media space were just three factors that impacted its operations in 2008/09.

"We're no different to other media companies," Mr McCarthy said.

Rupert Murdoch's News Corp, which publishes The Australian and The Daily Telegraph, posted a net loss of US$3.4 billion ($5.04 billion) for the year to June, compared to a net profit of US$5.4 billion a year earlier, due a downturn in advertising and writedowns forced by the financial crisis.

McCarthy said Fairfax had achieved the best financial performance possible in an unprecedented and difficult business environment.

"Among the challenges we've faced have been reshaping Fairfax for the future, at the same time as dealing with depressed advertising markets," he said.

"The emerging company will be a stronger force in the market place."

McCarthy said Fairfax would continue to look at new business opportunities.

Charging readers for online access to its websites, beyond The Australian Financial Review, was "one of the options" the company was looking at.

Fairfax's Sydney and Melbourne metropolitan publications suffered a steep 46 per cent decline in EBITDA during 2008/09, while regional and community publications EBITDA fell 16 per cent.

The company's printing division posted an 18.7 per cent drop in EBITDA, while online EBITDA was down 0.8 per cent.

A A$624 million capital raising earlier in the year had helped reduce net borrowings to A$1.78 billion.

The company did not declare a final dividend, as was expected.

Shares in Fairfax were up six cents at A$1.47 at 1113 AEST.

- AAP