FAIRFAX Media believes it is through the worst of the global financial crisis, riding resurgent advertising markets to lift underlying earnings by 37 per cent from the depths of market turmoil in early 2009.
But the toll of the crisis remained clear in Fairfax Media's first-half results yesterday, showing revenue and underlying earnings sharply down from pre-crisis levels, despite the rebound.
Chief executive Brian McCarthy welcomed a 9 per cent increase in revenue and the 37 per cent increase in earnings before interest, tax, depreciation and amortisation (EBITDA) when comparing continuing businesses in the two most recent halves.
But Mr McCarthy was cautious about the advertising spending outlook, which he said was difficult to forecast.
''There is still a long way to go and I am reluctant to say that it's a permanent trend,'' he said.
Mr McCarthy also said classified advertising would be affected by continuing challenges from the internet, and the New Zealand advertising market was lagging the country's economic recovery.
Fairfax recorded a first-half profit of $143.5 million, from a loss of $375.6 million for the previous corresponding period. The previous loss was a result of $523 million in one-off write-downs and other significant items.
Shares in Fairfax, owner of The Age, traded as high as $1.88, before closing at $1.805, 2¢ up from the previous close of $1.79.
A clearer picture of Fairfax's rebound is shown by EBITDA in continuing businesses over the previous three halves.
On this measure Fairfax recorded $370 million in EBITDA in the second half of calendar 2008, falling to $235 million in the first half of 2009 before bouncing to $323 million in the most recent half.
RBS media analyst Fraser McLeish emphasised Fairfax's short-term positioning to benefit from a cyclical advertising recovery ahead of longer-term structural concerns about the impact of the internet on media businesses.
''My view is cyclical is going to outweigh structural, certainly through the recovery period,'' Mr McLeish said. ''The rising tide lifts all boats as the ad markets recover.''
The rebound in EBITDA when comparing the two most recent halves was greatest in Fairfax's metropolitan media, which includes The Age and The Sydney Morning Herald. It more than doubled to $54 million.
Specialist media, which includes The Australian Financial Review, was the next largest recovery, with EBITDA increasing 67 per cent to $36 million.
The result was favourably received by analysts, who applauded cost-cutting that led to a fall in expenses of 8.5 per cent in continuing businesses from the previous corresponding period.
In a result with no one-off losses, Fairfax announced a dividend of 1.1¢ a share and said it had paid down $170 million in debt in the half.
FAIRFAX
Profit $143.5 millionNA
EPS 6.1¢ NA
Revenue $1.26 billion -9.2%
Dividend 1.1¢ -45%
