Fairfax Media Group [ASX: FXJ] reversed a slide in earnings from its New Zealand business as cost cutting helped make up from a continued decline in advertising and circulation.
Earnings before interest, tax, depreciation and amortisation rose 3.1 percent to $80.2 million. Costs fell 7.3 percent to $318.6 million, making up for a 5.4 percent decline in revenue to $398.9 million. Advertising sales in the year fell 5.2 percent to about $269 million while circulation declined 6.6 percent to $117.9 million.
Fairfax chief executive Greg Hywood said print advertising in New Zealand isn't declining at the same pace as in Australia and benefited from a strong agricultural sector, stabilisation in property advertising and local government spending, although there was "weakness in a number of categories including retail and employment.
Fairfax's cost cutting in New Zealand has included axing workers and sharing some printing with rival APN News & Media. Fairfax, which publishes the Dominion Post, Press and Sunday Star Times newspapers and operates the Stuff website, slashed the value of its New Zealand mastheads by more than 80 percent in 2012 to recognise the decline in traditional publishing.
The Fairfax group posted a profit of A$224.4 million in its latest year, compared to loss of A$16.4 million a year-earlier, when it took impairments of A$444 million on print assets and intangibles. In the latest year, one-time items netted out as a gain of A$66.7 million. Sales fell 3 percent to A$1.97 billion.
The company is two years into a three-year restructuring programme it calls Fairfax of the Future, which is targeting annualised savings of A$311 million in 2015. Net costs to deliver the programme through 2015 are expected to be about A$290 million, including A$245 million for redundancies, capital spending of A$86 million and operational spending of $25 million.
"Today's result underlines the ability of Fairfax to deal with enormous structural changes impacting upon the industry," Hywood said. "We have stabilised earnings and completely remade a legacy-based, vertically-integrated newspaper business into a genuinely multi-platform media company."
The company will pay a final dividend of 2 Australian cents a share, bringing total payments for the year to 4 cents.
Shares of Fairfax last traded on the ASX at 88.5 Australian cents and have climbed 62 percent in the past year. The stock is rated a 'hold' based on the consensus of 12 analysts polled by Reuters, with a median price target of 91 Australian cents.