FXJ 0.00% 66.0¢ fairfax media limited

profit up - eps up - div. up

  1. 635 Posts.
    Some healthy news from Fairfax.
    Let's see what the market impact will be.

    Company Announcement
    Half Yearly Report

    HOMEX - Sydney
    John Fairfax Holdings Limited [ASX:FXJ] today announced a net profit
    after tax for the six months ended 31 December 2002 of $70.0 million,
    up 94.2% from the previous corresponding period. Excluding the $11
    million significant item in the previous corresponding period,
    related to the write-down of the investment in CitySearch, net profit
    after tax was up 48.8%.

    Earnings per share (post PRESSES dividend) were 8.39 cents, up 70.9%
    from last year; and up 31.2% from last year's earnings per share pre
    significant item.

    On a trading basis, group EBIT rose 27.5% to $112.2 million.
    Publishing EBIT (excluding associate profits) was $114.5 million, up
    11.1%. f2 Network's EBIT loss was $3.4 million, well down from the
    $15.3 million recorded for the corresponding period last year.
    Publishing revenues increased $16.8 million, or 2.9%. Revenues in f2
    Network's continuing News and Classifieds business increased by $5.4
    million, or 84.4%.

    Total group costs were $466.7 million, a reduction of $14.1 million,
    or 2.9%, compared to the previous corresponding period.

    Considering the strength of the balance sheet and the significantly
    reduced capital expenditures going forward as a result of the recent
    upgrades to production facilities, the Board is pleased to announce
    an increase in the fully franked interim dividend of 0.5 cents per
    share or 11.1% to 5.0 cents.


    With Continuing firm management of all aspects of the business and an
    improvement in market conditions, we were able to secure gains in
    profit. Our mastheads have strengthened their leadership positions in
    their markets. While circulation levels have remained strong,
    readership and usage (the main drivers for advertisers) have seen a
    significant improvement against our major competitors and the market
    during the past year.

    Three main factors underpin the result:

    1. Resumption of revenue growth, reflecting both a stronger media
    market and a number of initiatives flowing from the reorganisation of
    sales activities in June 2001

    In the first quarter, revenue growth improved only marginally over
    the previous corresponding period. However, in the second quarter
    growth increased by over 5% compared to the previous corresponding
    period. Display revenues accounted for the majority of the
    improvement. Classifieds also improved, notably employment and motor

    Improved performance was achieved by most of the business units. Our
    regional and suburban newspapers have continued to post strong gains
    on last year. The metropolitan papers have seen solid growth,
    although the business publications market remains weak.

    A number of targeted sales initiatives, both in traditional and new
    areas, contributed to this result. Examples include special reports,
    themed issues of magazines, special value-adding classified
    promotions, and new retail advertising supplements and inserts.

    2. Further cost reductions were achieved during the period. Total
    costs were down $14.1 million, or 2.9% from the prior year.
    Publishing costs increased by 1.9%, as increasing efficiencies and
    lower newsprint costs partly offset contracted wage and salary
    increases and additional costs from the dual running of the
    Tullamarine and Spencer Street printing facilities. Costs in f2
    Network were reduced by $22.6 million or 63.3%.

    Underlying costs are expected to remain flat in the second half. As
    previously announced, the commissioning of Tullamarine will lead to a
    slight increase in reported total costs for the half. For the 2003
    financial year, as a whole, we anticipate costs to be slightly lower
    than those of the 2002 financial year.

    3. A significant reduction in the losses from f2 Network as a result
    of a more targeted approach and the closure of the CitySearch
    directory business. The EBIT loss improved to $3.4 million for the
    first half, a reduction of 77.7% on the previous corresponding
    period. Solid revenue growth of $5.4 million or 84.4% was achieved in
    the continuing News and Classifieds business. The f2 Network is well
    on track to achieve an EBIT loss below $10 million for the 2003
    financial year, as previously foreshadowed.

    We have also continued to make good progress in other areas of our
    business, notably commissioning of new printing facilities and
    strengthening of our newspaper franchises.

    The new printing facility at Tullamarine and the upgrade at Chullora
    are now substantially complete and close to being fully operational.
    Both facilities have been completed within budget with the
    commissioning of both plants proceeding as planned. We now have
    printing capacity, quality and efficiencies at world best standards
    that will offer significant benefits going forward.


    Trading in the first 5 weeks of the 2003 calendar year has continued
    at levels above 2002. However, it is still too early to forecast the
    result for the full year with any accuracy, especially with the
    continuing uncertainty in the international situation.

    Should the current trading environment continue. we expect profit
    after tax in the second half to increase above last year's second half
    result of $43.3 million pre significant items, despite a one-off cost
    increase as a result of the commissioning of the Tullamarine printing

    Bruce Wolpe, CORPORATE AFFAIRS (02) 9282 3640

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