Fairfax Media’s return to net profit has been driven by digital revenues and by cost controls.
The publisher posted a $224.4 million profit for the 2014 financial year, an improvement on the $16.4 million loss recorded in the prior year.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for continuing businesses was $306.4 million up 1.8% on the prior year.
And that was achieved on revenue down 3% to $1.972 billion.
Group digital revenue is now $309 million, about 17% of total revenue, up 3 percentage points on the previous year.
Improved profitability from Metropolitan Media was a highlight of the full year, with EBITDA of $120.9 million up 41.3%.
Contributing to this result was revenue from digital subscriptions launched at the beginning of the financial year, growth in the Domain Group and an ongoing focus on cost.
Advertising revenue was challenged in the 2014 financial year with print revenue declines of 24% but digital advertising revenue increased by 6%.
CEO Greg Hywood says transforming a business as diverse as Fairfax was always going to be a multi-year journey.
In early August, the Sydney Morning Herald and The Age had more than 140,000 paid digital subscribers, and an additional 111,000 eligible print subscribers who have signed up for digital access.
The contribution of digital subscriptions together with our focus on profitable print circulation saw underlying circulation revenue increase 11.4% for the year.
Domain continued to accelerate its digital growth and manage declines in print. Its online revenue grew 40.5%, driving digital EBITDA growth of 47% as margins expanded. Tight cost control across the print and digital operations contributed to a 38.8% increase in Domain’s EBITDA to $57.6 million.
Fairfax also is now debt-free, and has $68 million in the bank.
A fully franked dividend of 2 cents per share will be paid on September 9, bringing total dividends for the year to 4 cents.
This chart shows the increasing role of digital revenue:
And this chart shows how digital subscriptions and online classifieds are driving growth in Fairfax’s metropolitan media:
(Disclosure: Allure Media, publisher of Business Insider, is 100% owned by Fairfax Media.)
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