Fairfax H1 net profit halves

Media group confident of its ability to cut costs and generate enough new revenue to avoid a 'bleak future'.

Fairfax Media (FXJ) remains confident of its ability to cut costs and generate enough new revenue to avoid a "bleak future" despite seeing its first-half net profit halved.

In the six months to December 29, Fairfax posted a net profit of $193.8 million, a 49.8% slide on the $386.3 million recorded in the previous corresponding period.

During the period Fairfax disposed of FRG Asia, InvestSMART and the Stayz Group businesses during the period with net proceeds of $221 million.

In the same period revenue was $1.083 billion, a 1.2% decline on the $1.096 billion in the first half of 2012.

Significant items in the period of $106.7 million impacted the results, compared to $19.8 million in the previous corresponding period.

The group will pay a full-franked interim dividend of two cents to shareholders on the register at March 5.

Chief executive and managing director Greg Hywood was optimistic about Fairfax's results and future prospects.

"We have shown a determination to transform the business through cost reductions and driving new revenue streams.

"It is these strategies that underpin a half-year result that’s starkly at odds with the conventional wisdom that traditional media companies face a bleak

future simply because reductions in print advertising cannot be immediately offset by increases in digital revenue.

He said it was a credit to "the skill and resilience" of the company that it recorded its first year-on-year increase in underlying earnings before interest, taxation, depreciation and amortisation (EBITDA) for continuing businesses since June 2010.

Fairfax reported underlying EBITDA of $178 million for continuing businesses, excluding significant items, which represents a 2.3% lift on the previous corresponding period.

The group said its first-half underlying profit lifted thanks to a 52% jump in earnings from its core metropolitan media business.

The media group made an underlying profit of $93.1 million for the six months to December 31, up 12% on $83.1 million a year ago.

The result was boosted by a 52% increase in earnings from the metropolitan media business, which includes its major newspapers and websites like the Sydney Morning Herald and The Age, along with its Domain real estate business.

Fairfax said its net cash at the end of the period was $80 million, a sharp turnaround on the $154 million net debt it recorded at June 30, 2013.

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