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Panpa Bulletin : September 2006
September 2006 PANPA BULLETIN | 13 by Jack Beverley The softer advertising mar- ket in NSW and, to a lesser extent, in Victoria, has been blamed for the seven per cent slump in the annual profit of Aus- tralia's second largest publisher, John Fairfax Holdings. The group's net profit fell from $263.2 million to $227.4 million, a 3.8% drop which chief executive David Kirk argued was largely cy- clical, caused by fewer job vacan- cies and poor economic cond- itions in the two states, rather than structural problems in the company. In particular, the economy in NSW had stagnated, with proper- ty values and consumer spending dropping. "We are reshaping Fairfax's earnings in the medium term with acquisitions and start-ups and reshaping the cost base for the digital medium world," said Kirk, who has spent almost $800 on ac- quisitions since he joined Fairfax as chief executive last year. Group costs rose 3.9 per cent to $1.42 billion, including a 49.2 per cent jump in the costs of Fairfax Digital operations. But the on- line operation is showing greater growth than the overall market. Revenue was $96.4 million, up 75.6 per cent, with a profit at the EBITDA level of $24.3 million -- well ahead of the $6.6 million earned in the 2005 financial year. The size of the problems fac- ing Fairfax because of the slugg- ish performance of its main metropolitan newspapers, The Sydney Morning Herald and The Age, come through in the tell-tale breakdown showing the extent of the downturn in the classified and display advertising volumes of the two mastheads: SMH: Classified volumes down from 5,726,800 to 5,553,300cms; display down from 2,298,000 to 2,274,400cms. The Age: Classified down from 4,461,800 to 4,323,400cms; dis- play down from 2,277,000 to 2,226,400cms. The Sunday Sun-Herald's dis- play volume rose from 846,800 to 953,900cms but there was a substantial drop in its classified volume, which dropped from 297,200 to 137,000 cms. The Australian publishing divi- sion, despite reporting improved circulations, failed to translate the uplift -- largely from improved subscriptions - into higher rev- enue, which was static at $134 million. Overall, the division's revenue fell 1.3 per cent to $1.28 billion, with EBITDA down 8.1 per cent to $297.7 million. Fairfax Media in New Zealand performed much better -- adver- tising revenue increased two per cent to NZ$427.8 million, but the slowdown in the economy and current rate fluctuations had aff ected the contribution to the group result. One of the most positive out- comes from NZ was the success of the online auction business Trade Me, acquired in April. It contribut- ed NZ$9.4 million to the division's results -- an EBITDA increase of 2.8 per cent to NZ$196.2 million. Since its acquisition, items for sale on the Trade Me site had in- creased more than 35 per cent and motor vehicles by 25 per cent. Real estate listings were up 27 per cent and more than 5200 jobs were now listed following the launch of Trade Me jobs on August 8. This rate of growth was exp ected to accelerate in 2007 and the company was confident that Trade Me would achieve its $45 million target for the 12 months ending 31 March, 2007. Kirk said Fairfax's aim was to achieve steady growth in pub- lishing and rapid growth in the internet businesses. The publishing growth would be achieved by continued diver- sification into regional, business and magazine publishing and further alignment of the cost base. Strong circulation and readership would help to drive advertising revenues. The outlook was for trading con- ditions to remain "constrained" in the core publishing markets. It was too early to provide meaning- ful guidance. Stagnant NSW economy hurts Fairfax Several of the 25 printing staff affected by the trans- fer of the production of one of APN's regional dailies, The Queensland Times, from Ipswich to the group's new production fac- ility at Yandina on the Sunshine Coast later this year, are opting to stay on and work at alterna- tive company sites. A pool of 33 casuals, mainly inserting staff, is being phased out. The high-speed Yandina press line, from German manufacturer MAN Roland, is scheduled to be commissioned in October, re- ducing to six the number of sites required in Australia to print the group's 14 dailies and other group and contract publications. By concentrating production at fewer sites, APN has been able to substantially upgrade over- all print quality, increase colour availability and boost paging. Yandina's new Regioman press is capable of producing 64 tab- loid pages in one-press pass or section, complemented by a Swiss-built Muller Martini pub- lishing system with strong coll- ation and inserting capabilities. A heatset Uniset tower on the Regioman line and inline stitch (staple) and trim is also part of the installation. APN Print's chief operating off icer, Brian Hood, said the clo- sure of the press had not been taken lightly. Staff had been kept updated about developments throughout the year. Redundancy would be paid to staff not taking up alternative employment. Eligible casuals will also receive severance pay- ments. All staff were being off ered professional support supp- lied by APN and the Queensland Government were also offering retraining assistance. As well as investing heavily in print facilities at Yandina and Bundaberg, a third upgrade was currently being planned. "The company and APN is proud of its printing division and the employees that continue to work with and support the com- pany," Hood said. The new de- velopments in APN Print would contribute to it being "a leader in print production in Australia." APN's Australian Regional Print manager Gary Osborne said the Yandina and Bundaberg presses would provide better quality printing, with more con- sistent colour, resulting in an imp roved service to advertisers and readers. "The Regioman is capable of printing 75,000 copies an hour in full colour, against 40,000 on the current press with only 30 per cent colour availability." The Queensland Times, which has a six-day average of around 12,000 copies, was founded in 1859 as The Ipswich Herald. It is the State's oldest surviving pro- vincial paper. All other departments will still operate from the existing premis- es in Ipswich. Hutton named QT manager See page 49. Sta changes at Queensland Times The Australian publishing division, despite reporting improved circulations, failed to translate the uplift -- largely from improved subscriptions - into higher revenue, which was static at $134 million.
November December 2006