Fairfax returns to profitability

Fairfax Media Ltd expects further earnings growth in the second half of fiscal 2010
after returning to profitability in the first half as costs fell and advertising
markets improved.
The diversified media company posted a net profit of $148.81 million for the six
months to December 27, 2009.
This was a major improvement on the $364.84 million loss reported in the first half
of fiscal 2009, when the company wrote down the value of its mastheads and booked
restructuring and redundancy charges.
Fairfax chief executive Brian McCarthy said advertising markets had turned the corner.
"We're only six or seven weeks into the second half so there is a long way to go, so
I am very reluctant to say this is a permanent trend," Mr McCarthy told reporters on
Monday.
"But you would say with some certainty I don't think it is going to go back to where
it was in that second half of that 2009 year.
"We're doing considerably better than that."
The same could not be said of New Zealand, where Mr McCarthy said Fairfax had
experienced "no rebound" of advertising revenues.
"It doesn't matter what publication you look at, it's still fairly well down across
the board," Mr McCarthy said.
Fairfax said in a slide presentation that trading for the first six weeks of the
second half of fiscal 2010 had been "stronger than for the same time last year".
"Whilst this is encouraging, revenue visibility and booking cycles remain quite
short with no sustained trends evident," the company said.
"Based upon current market trends we anticipate earnings growth in the second half
compared to the same period last year."
Fairfax declared an interim divided of 1.1 cents per share, down from two cents in
the previous first half.
On an underlying basis, net profit rose 5.6 per cent even though total revenue
declined by 12.8 per cent to $1.26 billion.
"We have extensively re-engineered the company to ensure that all our businesses are
operating much more efficiently," chairman Roger Corbett said in a statement on
Monday.
Fairfax publishes The Age and The Sydney Morning Herald newspapers, as well as The
Australian Financial Review and a host of regional mastheads after its merger with
Rural Press Ltd.
It also owns Sydney radio station 2UE, Melbourne's 3AW, 4BC in Brisbane and Perth's
6PR and 96FM.
Mr McCarthy said the company's radio stations "performed better" in the first half
in terms of revenue versus the market.
Fairfax shares closed up two cents at $1.805.
Meanwhile, APN News and Media Ltd has reached an agreement with Fairfax to be the
reseller of three Fairfax-owned websites in the company's regional markets.
The deal covered domain.com.au, mycareer.com.au and drive.com.au.
"This type of agreement will allow APN to build a strong and relevant online
presence for advertisers and consumers," APN chief executive Brendan Hopkins said in
a statement.
APN shares closed up four cents at $2.40.