Printed newspapers are set to be a smaller part of Fairfax Media’s business as the Australia/NZ group cuts distribution in remote areas and shuts a second metropolitan pressline.
In interim results released today, the company revealed a 41 per cent fall in first-half net profit to $96.7 million, as restructuring continues under a plan now dubbed ‘Fairfax of the Future’.
In interviews after presentations to financial analysts, chief executive Greg Hywood said costly distribution to remote areas would be cut. He plans to change the mix under which only 30 per cent of current expenditure was spent on producing editorial content and selling advertising, as well as reducing overall costs.
"Large parts of our current operating model are still geared to supporting the old business model. We are reshaping the way we do business,” Hywood says.
A fall in advertising led to smaller issues and a 10.5 per cent drop in revenue from printing, which in turn led to a 20 per cent reduction in the contribution to profits.
Net revenue from printing was down a quarter (24.9 per cent).
Some $10.8 million was written off on the value of its plant and equipment, adding to the $14.4 million spent on restructuring and redundancy costs, with more to come.
Commitments under a three-year implementation plan are being overseen by a ‘results delivery office’ headed by chief financial officer Brian Cassell.
Shareholders were told that Sydney/Melbourne subediting had already been successfully outsourced in the first quarter of the year, and print rationalisation was underway.
One (Sydney) pressline has been closed, and a second will close before June this year, with a reduction of approximately 45 full time staff. It is anticipated the equipment will be relocated to New Zealand.
Shareholders were also told of internal consolidation of activities and “potential industry rationalisation”, presumably a reference to Fairfax’s hopes for plant sharing with News Limited and/or other publishers.
Shareholders will receive an interim dividend of two cents a share fully franked.
Shares fell one per cent in trading following the result, bringing the decline to near 42 per cent in two years.