Net profit for the six months to December more than trebled to $83.7 million but that was only because impairments were lower than in the prior corresponding period.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 9.9 per cent to $145.1 million and Fairfax confirmed long-standing rumours that it is aiming to boost shareholder returns by spinning off Domain into a separate ASX-listed business.
Fairfax would retain a 60-70 per cent stake in Domain, which remains the group’s most profitable venture despite a previously flagged 13 per cent drop in (EBITDA).
“The time is right for Domain to consider taking this next step,” Fairfax chief executive Greg Hywood said in a statement.
“It has achieved the scale in revenue, earnings and audience needed to operate as a standalone listed entity.”
Fairfax said it is conducting a strategic review of Domain and that a sale would be completed by the end of 2017, subject to talks with the Australian Taxation Office and a shareholder vote.
Fairfax and Domain would have a similar relationship to that of rival News Limited and ASX-listed real estate classifieds business REA Group.
The Rupert Murdoch-controlled media giant owns 61.6 per cent of REA.
Fairfax’s earnings from Australian metro media – which includes masthead print titles The Sydney Morning Herald, The Age and The Australian Financial Review – dropped 12 per cent.
Despite the continued decline in advertising revenue and need to put up prices, Mr Hywood said there were no plans to make the titles digital-only.
“While we have considered many options, the model we have developed involves continuing to print our publications daily for some years yet,” Hywood said.
“This is the best commercial outcome for shareholders based on current advertising and subscription trends.”
FAIRFAX’S FIRST HALF
- Net profit $83.7m from $27.4m
- Revenue down 4.8% to $913m
- Interim dividend flat at 2.0 cents, partially franked