Fairfax posts first-half loss

Monday 23rd February 2009

Fairfax Media posted a first-half loss as advertising revenue dwindled and the publisher wrote down the value of its mastheads and media licenses.

Australia's second-largest newspaper company had a loss of A$365.3 million, or 24.8 cents a share in the six months ended Dec. 31, from a profit of A$187.7 million, or 12.5 cents, a year earlier, the company said in a statement. Sales rose 0.5% to A$1.45 billion.

The loss constitutes "the very best possible results in an exceptionally difficult economy," chairman Ron Walker said. "The board and management will focus on extracting the best possible performance from our existing portfolio of assets."

Shares of the Sydney-based company fell 2.4% to A$1.025 on the ASX and have slumped 74% in the past 12 months. The biggest drop was in New Zealand, where revenue tumbled 15% in the first half, while pretax earnings fell 29%.

Fairfax cut its dividend to 2 cents from 10 cents and suspended its dividend reinvestment plan.

The outlook for the rest of the year may be just as grim. The company said trading conditions have weakened in January and February and classified advertising is expected to remain weak for the rest of the financial year.

Brian McCarthy, who took over from David Kirk in December, said Fairfax's expansion into online ventures like the Trade Me auction site and its Fairfax Digital sites in Australia have helped buffer the company from dwindling returns from publishing and radio stations.

The company took a A$447.5 million impairment charge against its mastheads, licenses and goodwill. Its newspapers include the Sydney Morning Herald, the Australian Financial Review and the Age, along with New Zealand's Dominion Post and Sunday Star-Times.

It also took a A$62.4 million restructuring and redundancy charge.

By Jonathan Underhill

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