Fairfax reports 600% headline profit drop

Fairfax Media has posted a loss of $2.73 billion for 2011/12, driven by massive writedowns on the value of its newspapers.

The media group's net loss for the year to June 24 was seven times bigger than the $390.9 million deficit it reported for the previous financial year.

Revenue at the media group, which is undergoing a massive restructure and shedding hundreds of jobs, fell to $2.33 billion from $2.5 billion.

The profit result was hit by $2.9 billion in writedowns, comprising a $2.8 billion non-cash impairment charge and other significant items worth $140 million.

Stripping out those significant items, underlying net profit fell to $212 million from $283 million a year earlier.

Chief executive Greg Hywood defended the result, saying the underlying performance showed the company "has a sound and diversified business".

"These results reflect a challenging environment," he said in a statement.

Underlying earnings before interest, tax, depreciation and amortisation fell 17 per cent on the previous year to $506 million, but came in above the company's previous guidance.

Fairfax said economic conditions "remain challenged" in core advertising markets and ongoing structural changes were affecting the metro newspapers business.

It said early 2012/13 revenues were tracking 10 per cent below 2011/12.

"Difficult trading conditions are likely to continue," the company's statement said.

A full franked final dividend of one cent a share was announced, down from 1.5 cents a year ago.

Mr Hywood volunteered to give up half his bonus because of the difficult conditions facing the company.

The Fairfax board had previously determined that Mr Hywood would receive an $840,000 bonus, equal to 35 per cent of his maximum short-term incentive.

However that bonus has been cut to $420,000 after Mr Hywood volunteered it be sliced in half.

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