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Fairfax profit down, digital income soars

 

Fairfax's full year profit has slumped by more than 60 per cent, but the diversified media company has flagged signs of an uptick in revenue for the year ahead due largely to real estate advertising.

The company's full year net profit dropped to $83.2 million from $224.4 million after revenue decreased by 5.3 per cent to $1.867 billion.

But revenue from its Domain real estate advertising service soared by 45 per cent, and the drop in underlying profit for the 12 months to June 28 was much softer at 3.9 per cent to $143.4 million.

Chief executive Greg Hywood said revenue for the first five weeks of FY16 was two to three per cent higher on the previous corresponding period, with Domain.com.au showing a 53 per cent boost.

"Through organic growth initiatives and acquisitions, we are moving to a position where the growth in our digital revenue offsets the decline in print," Mr Hywood said.

"As we foreshadowed a year ago, we are investing in our growth businesses and ventures."

At 1030 AEST, shares in Fairfax were up four cents, or 4.9 per cent, at 85.5 cents.

The company reported an additional $39 million in growth-related expenses for a year in which it launched streaming service Stan, a joint venture with Nine Network.

Mr Hywood said the Netflix competitor attracted 300,000 sign-ups by August 3 and was "well on track" to have as many as 400,000 by December.

He added that digital revenue should be further boosted by the August 19 launch of HuffPost Australia, its partnership with The Huffington Post.

Fairfax, whose key metropolitan media division includes the Sydney Morning Herald, Australian Financial Review and The Age newspapers, reported net cash of $64.4 million, compared to $67.6 million last year.

Mr Hywood said the cash gives "considerable flexibility to continue to invest both in our existing businesses and via acquisition as we continue the transformation of the company."

"We have simplified our operations and well exceeded our targeted $311 million annualised cost savings by 2015 ... to become a leaner, more agile organisation," Mr Hywood said.

"The disciplined and pragmatic approach instilled through Fairfax of the Future is now embedded in management, with cost savings and transformation continuing."

Fairfax's $200 million merger with Macquarie Radio News led to 90-year-old Sydney radio station 2UE folding its newsroom into that of 2GB with the loss of 11 jobs, while costs were also trimmed at Brisbane's 4BC.

"MRN is well positioned to derive revenue synergies from the establishment of a genuine national network with the number one stations in Sydney and Melbourne," Mr Hywood said.

FAIRFAX'S FALLING FIGURES

* Net profit down 62.9pct to $83.2m

* Revenue down 5.3 per cent to $1.867b

* Partly franked final dividend unchanged at two cents.