Within minutes of trading on the ASX this morning, shares of media heavyweight Fairfax Media Limited (ASX: FXJ) have jumped higher, despite the company announcing a massive 86% fall in net profits.
For the half-year ended 31 December 2014, Fairfax's revenue fell 12.9% to $943.3 million, whilst net profit after tax came in at just $26.3 million, down from over $193 million.
Excluding significant items, such as redundancy costs of $38.3 million and an asset impairment charge of $18.3 million, underlying net profit after tax fell just 0.6% to $86 million.
In the prior period, the owner of popular publications such as The Age, Sydney Morning Herald and Australian Financial Review also booked $100.7 million for the sale of its Stayz accommodation website.
With net cash of $37 million, down from $68 million last year, Fairfax's board resolved to declare an interim dividend of two cents per share, in line with the prior interim payout.
The group also announced a buyback of up to 121 million shares, or approximately 5% of the total on issue.
Commenting on the results, CEO and Managing Director Greg Hywood said, "For the six months to December 2014, Fairfax Media reported EBITDA of $162.4 million for continuing businesses. This result is a solid outcome. It is the result that we had planned for. There are no surprises."
Should you buy Fairfax shares?
Fairfax is experiencing growth in a number of its businesses but it finds itself on the unfortunate side of disruptive technologies including social media and more. Whilst cost savings may play a part in helping the company to post decent profit results in the near-term, already in the second half of 2015 management has noted revenues are continuing to fall – something which is likely to go on for many years, in my opinion.
