Fairfax reports positive results from NZ operations

John Fairfax Holdings Ltd says its New Zealand operations outperformed Australian units in the June year and online auction house Trade Me, bought in April for $700 million, is meeting expectations.

The media group today reported a 7 per cent fall in net profit to A$227.45m ($271m) for 2005/06.

Looking ahead, it said trading conditions remain constrained in its core publishing markets.

The group's underlying net profit before one-off items fell four per cent to A$228.48m but Fairfax Media in New Zealand's underlying results (ebitda) rose 2.8 per cent to $196.2m.

NZ earnings before interest and tax increased 3.0 per cent to NZ$185.4m.

"Trade Me is already showing itself to be an excellent acquisition for the company," chief executive David Kirk said.

"The business is on track to deliver expected first year earnings targets of $45 million."

Trade Me Jobs was exceeding expectations, with over 5200 listings.

Advertising revenue increased 2 per cent to NZ$427.8m.

The slowdown in the New Zealand economy and currency rate fluctuations affected advertising revenues and contributions to the group result.

Excluding acquisitions, underlying publishing costs were well contained despite strong inflationary pressures on labour costs, Mr Kirk said.

New Zealand mastheads had circulation and readership growth.

Trade Me contributed $9.3m in ebitda to this result.

"All areas of the (Trade Me) business have experienced significant growth over the past five months," Mr Kirk said.

Items for sale had increased over 35 per cent, car ads increased by a quarter, and real estate listings by 127 per cent.

"The rate of growth is anticipated to continue to accelerate in 2007 and the company is confident that Trade Me will achieve its $45 million ebitda target for the twelve months ending March 31, 2007," Mr Kirk said.

He said the group was being successfully reshaped for stronger earnings growth in the medium term.

Fairfax Digital was performing strongly.

"It is too early to provide meaningful guidance."

"Our aim is steady growth in publishing and rapid growth in our internet businesses," Mr Kirk said.

"Growth in publishing will be achieved by continued diversification into regional, business, and magazine publishing, further alignment of the cost base and strong circulation and readership that help drive advertising revenues."

Mr Kirk said the company made strong progress on its objectives in the year with the acquisition of the Border Morning Mail, the Rodney Times, The Independent Financial Review, and the launch of Travel and Leisure and AFR Smart Investor.

"The rapid growth of our internet businesses is changing the overall growth and earnings profile of the company," Mr Kirk said.

Fairfax Digital's revenue rose 75.6 per cent to A$96.4 million, with earnings before interest, tax, depreciation and amortisation (EBITDA) of A$24.3 million, up from A$6.6 million in 2004/05.

Total traffic across all the Fairfax sites increased to over 3.2 million unique browsers per month.

The Australian publishing business posted an 8.1 per cent decline in ebitda to A$297.7 million, with revenue easing 1.3 per cent to A$1.28 billion, news agency AAP reported today.

Fairfax told AAP results for the Australian publishing businesses reflected weaker advertising markets, particularly in NSW and Victoria, which offset growth from the magazine, regional and business media operations.

Metropolitan publishing revenues declined as a result of continuing difficult economic markets that affected all advertising categories in both NSW and Victoria.

Fairfax General Magazines were steady while Fairfax Regional Newspapers posted solid revenue and profit growth.

Fairfax Business Media continued its revenue and profit growth, driven by performance in financial publishing and in premium employment advertising.

Fairfax declared a final dividend of 11.5 cents, bringing the total ordinary dividend for the year to a record 19.5 cents, an increase of one cent over the previous year.

- NZPA