Fairfax Media slumps to $490m loss

Fairfax Media Ltd has slumped to a full year net loss.
File photo
Fairfax Media Ltd has slumped to a full year net loss. File photo

Fairfax Media Ltd has slumped to a full year net loss after booking more than A$600 million (NZ$756 million) of impairment and restructuring charges in fiscal 2011.

The diversified publishing house reported a net loss for the 12 months to June 26 of A$390.9 million (NZ$490 million), compared with net profit of $282.12 million in the prior year.

Fairfax said the statutory result was impacted by writedowns to the carrying value of its newspapers, customer relationships and goodwill to the tune of $650.7 million.

Restructuring costs of $23.9 million were also included in the statutory result.

Underlying net profit after tax was $273.7 million, Fairfax said in a statement on Friday, down 1.8 per cent on the prior year.

Fairfax chief executive Greg Hywood said the company was dealing with the challenges of a "prolonged cyclical downturn'' and aggressively responding to structural changes in the media sector.

Mr Hywood said the vast majority of the impairment and restructuring charges, which he described as substantial, were of a non-cash in nature and had no impact on the operating strength or debt levels of the company.

Revenue fell 0.7 per cent to $2.47 billion.

Fairfax's share price, similar to other media stocks, has fallen sharply in recent times as global economic woes and weak consumer confidence at home hit retail spending and dampened the advertising market.

Fairfax said underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $607.4 million in fiscal 2011, just above company guidance of $600 million and down five per cent from the prior year.

Hywood said the company's cost reduction program, which has included outsourcing sub-editing roles to a third party, Pagemasters, a subsidiary of Australian Associated Press, would yield $85 million in savings over the next two years.

Fairfax said advertising and other revenue in the second half of fiscal 2011 was down 3.1 per cent below the prior corresponding half.

In terms of current trading, Fairfax said the year to date had shown "some improvement''.

Advertising revenues were down four per cent compared with the prior year, Fairfax said, and appeared to be "stabilising from the last quarter of the 2001 financial year when advertising revenues were down six per cent''.

"Visibility in advertising markets remains opaque and general economic trends do not give us confidence that we will see any significant rebound in revenues in the current half,'' Fairfax said.

"A number of cost reduction programs are being implemented across the company to partially offset this revenue downturn.''


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