Domain up, Fairfax down in FY2016

10 Aug 2016

Domain Group, a division of Australia’s Fairfax Media, grew revenue by 33 percent and EBITDA by 40 percent in the financial year which ended on June 30, but couldn’t keep Fairfax Media from pencilling in negative growth for a number of key indicators.

Domain Group houses most of the classified brands of ASX-listed Fairfax Media.

Fairfax Media’s revenue declined two percent in FY2016 from FY2015, and its profit (excluding extraordinary items) dropped 7.6 percent to $AUD133 million. It generated revenue of AUD$1,831 million ($1,408 million U.S.) in FY2016. Including all extraordinary items (write-downs), the net loss stood at an uncomfortable AUD$894 million in FY2016.

Still, chief managing director Greg Hywood said the company’s performance was “proof that the transformation of Fairfax Media over recent years had succeeded”, citing what he described as “stable” top-line revenue and EBITDA.

“This flat, top-line revenue was attained despite an 11-percent decline in Group publishing revenue in H2 of FY2016,” Hywood said. “Digital and non-print earnings now constitute more than 40 percent of Fairfax’s EBITDA. On current trends, next year this will be closer to 60 percent.”

Domain’s strong performance and Fairfax’s recent decision to separate out the classified group’s results from Fairfax Media have sparked rumors about a possible fire sale of Domain Group.

While a sale would shore up revenue and profit declines in other parts of the Fairfax business, notably in its print division, Metro Media (revenue down 5 percent in FY2016), analysts believe a sale is unlikely, given Domain’s strong performance over the last two financial years.

Top earner for Domain was digital, which doubled its earnings and posted revenue growth of 27 percent.

Like rival and market leader Realestate.com, Domain has been pursuing premium product listings in an effort to grow share in a slowing market. Domain’s premium-depth revenue achieved 40 percent year-on-year growth and accounted for 76 percent of Domain’s digital revenue.

The results report also noted that Domain had achieved digital revenue growth of 10 percent in the first five weeks of FY2017, with a strong increase in listings. Like REA Group, Domain has cited the drawn-out federal election as a dampener on new listings volume in July this year, when new listings dropped by 25 percent m-on-m in Sydney alone.

Go to this PDF for a list of the huge portfolio of brands of Fairfax Media in Australia and New Zealand. Among the classifieds are (not all in Domain) AllHomes.com.au, HomePriceGuide.com.au, PriceFinder.com.au, RealEstateInvestor.com.au, HorseDeals.com.au, Adzuna.com.au, AgTrader.com.au.

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Kate Lyons

Kate Lyons has worked as a business, marketing and finance journalist for over 25 years. Formerly news editor and deputy editor of advertising weekly B&T, as well as editor of Australian Small Business magazine and Franchising Magazine, she has written for all major metropolitan newspapers in Australia, including The Australian Financial Review, The Australian, The Sunday Telegraph and The Sydney Morning Herald.