Fairfax Media's New Zealand business reported a decline in sales and earnings in its latest year as the company focused on cost control and building its digital market share in the face of weaker advertising and circulation.
New Zealand earnings before interest, tax, depreciation and amortisation fell 12 per cent to $70.3 million in the 12 months ended June 28, while its Ebitda margin narrowed to 18.3 per cent from 20.1 per cent. Advertising sales fell 6 per cent to $252.4 million and circulation declined 3 per cent to $114 million, resulting in a 3.7 per cent decline in total revenue.
The publisher of newspapers including the Sunday Star-Times and The Press, a portfolio of magazines including Cuisine, NZ House & Garden and the TV Guide said its Stuff website jumped to New Zealand's fourth most popular in its latest year, lifting its unique audience by 23 per cent to 1.8 million, the fastest growth among the top 10 sites.
The company is aiming to bolster its digital growth to make up for weaker advertising from traditional media such as newspapers.
Advertising sales were "impacted by weak market conditions in New Zealand," Fairfax said in presentation notes.
"Food, retail and employment advertising declines (was) offset by strong performance in real estate."
Weaker circulation sales reflected stable subscription revenue offset by "continued pressure on retail sales."
The company said it was maintaining "strong cost management in publishing whilst investing in the digital business."
Fairfax Media chief executive Greg Hywood said annual digital revenue growth in New Zealand was 38 per cent and accelerated in the second half, reflecting "strong momentum at Stuff.co.nz and continued investment in product development and marketing."
Notes to the company's financial statements show it took an impairment of A$6.5 million against software, investments, property, plant and equipment against its New Zealand business, compared with A$5.5 million a year earlier, when it also recorded A$5.6 million of redundancy costs.
Across the whole Fairfax group, impairments rose 46 per cent to A$34.9 million, while restructuring and redundancy charges almost tripled to A$66.2 million.
Sydney-based Fairfax posted a 0.3 per cent gain in revenue to A$1.84 billion in its latest year, while expenses rose 0.5 per cent to A$1.55 billion. Net profit for the group fell 3.9 per cent to A$149 million. It will pay a final dividend of 2 Australian cents a share, making 4 cents for the year..
"We have simplified our operations and well exceeded our targeted A$311 million annualised cost savings in 2015, resulting from our Fairfax of the Future programme to become a leaner, more agile organisation," Hywood said, referring to the programme instituted in February 2012.
Fairfax shares last traded at 81.5 Australian cents and have declined about 8 per cent in the past 12 months, while the S&P/ASX 200 Index fell 2.2 per cent. The stock is rated a 'buy' based on the consensus of 10 analysts polled by Reuters.
The shares bottomed out in late 2012 at 35 cents, a year in which the company took a A$2.8 billion impairment on its goodwill and mastheads as it reassessed the value of its traditional media assets and sought to reform itself as a nimble, digital-based company.