Fairfax Media returns to profit, iiNet earnings up 30%: Economy Roundup

Fairfax Media has recorded a net profit after tax of $141.81 million for the six months ending December 27, compared to a loss of $364.85 million during the previous corresponding period.

The company also said it anticipates good growth in second-half earnings, and it expects to take advantage of a healthy recovery in the advertising industry.

While revenue actually declined by 12.8% to $1.26 billion, net profit actually rose by 5.6%. The company’s shares increased by 1.96% to $1.82 this morning.

Chief executive Brian McCarthy said in a statement he was pleased with the results, noting trading during November and December displayed improvements over 2008 figures.

“December 2009 advertising revenues were approximately 2.5% higher than December 2008, the first time in over 12 months that a previous corresponding period gain had been achieved.”

“When compared to the second half of the 2009 financial year, all areas of the company saw revenue and profit gains in the first half of 2010.”

Meanwhile, the number of new motor vehicle sales has declined by a seasonally adjusted 3.7% in January to 86,636, with New South Wales recording the biggest decline at 7.9%, the latest figures from the Australian Bureau of Statistics show.

However, the figures show sales are still up by 15.6% from last year, when new vehicle sales plummeted in the middle of the global financial crisis.

iiNet profit increases

In the telecommunications industry, ISP iiNet has recorded an 11% increase in revenue to $228.1 million and a 20% increase in EBITDA to $37.4 million for the first half of the financial year.

The company, which recently won a court battle brought against it by a federation of major entertainment studios and labels, recorded a 6% in statutory NPAT to $12.1 million, while underlying NPAT grew by 30% to $14.8 million.

Managing director Michael Malone said the results were pleasing, and noted the release of new products over the next year, including IPTV, to keep demand high.

“We continue to be the leading innovator and challenger in the Australian telecommunications market,” he said.

“In addition to the continued success of iiNet’s Naked DSL product, our latest product innovation, BoB™, an all-in?one wireless home hub combining the phone and internet and connecting to entertainment platforms like Xbox, has also been a resounding success, with more than 21,000 units now sold since its launch in August 2009.”

The Australian sharemarket has opened higher today due to good leads from Wall Street late last week and positive results in equity and commodities markets.

The benchmark S&P/ASX200 index was up 75 points or 1.63% to 4710.4 at 12.10 AEST, while the Australian dollar also opened higher to US90c.

Commonwealth Bank shares increased by 2.1% to $53.90, while Westpac shares also rose 2.6% to $26.11. NAB gained 0.8% to $25.44, as ANZ lifted 2.9% to $22.59.

Oil giant Caltex Australia has recorded a net profit on a replacement cost basis of $203 million for the 12 months ending December 31, after recording $186 million for the previous corresponding period in 2008.

Revenue declined by 25% to $17.7 billion, down from $23.6 billion during 2008. Additionally, the company said it is considering legal action after the Australian Competition and Consumer Commission opposed the group’s acquisition of ExxonMobil’s service stations.

“Due to depressed global demand and the expected growth in global refining capacity that has led to global refiner margins remaining under pressure, the short-term outlook for Caltex remains challenging,” the company said.

“However, the exposure that Caltex has to the mining, agriculture and transport industries in Australia, and the anticipated long-term growth in demand for diesel, jet fuel and premium fuels point to a positive medium- to long-term outlook for the company.”

Challenger records profit of $176 million

Challenger Financial Services has recorded a $176.7 million profit for the first half of the year, compared to a loss of $107.9 million recorded during the previous corresponding period.

“Challenger has emerged soundly and has participated in the global market recovery during the interim period,” the company said in a statement to the ASX.

“The six months to December 31, 2009 has seen the gradual recovery in global debt and equity markets following the events of the global financial crisis which adversely impacted many participants in the Australian and global financial services sector during the last financial year.”

Overseas, the German Federal Cartel Office has now begun an investigation into the proposed $130 million joint venture between iron ore giants BHP Billiton and Rio Tinto.

The decision comes as the European Commission and the Australian Competition and Consumer Commission are investigating the move. Some industry analysts have said the venture will create a monopoly for the company in the iron ore sector.

Meanwhile, American investors are awaiting a speech from Fed Chairman Ben Bernanke regarding the current state of the economy, after the central bank made the surprise move of raising the discount cash rate.

Some analysts have suggested the move indicates the Fed believes the economy to be recovering, however, Wall Street has remained anxious regarding the withdrawal of economic stimulus.