Powers also told shareholders the company's first-quarter performance was good, and its outlook for the year was positive.

He later told reporters the company's first-quarter earnings had outpaced those a year earlier: "It's a solid improvement."

He told the meeting Fairfax's operating results for the first four months were good but he gave no earnings figures.

Fairfax, like most Australian companies, reports first-half and full-year earnings.

"The outlook for the rest of the year continues to be positive," he said, adding that if domestic economic growth slowed, it would hinder earnings by slowing advertising revenue.

Powers declined direct comment on whether the company could meet analysts' consensus net profit forecast of A$130.9 million for 1998-99, saying itsearnings hinged on the economy.

In the year to June 30, 1998, net profit jumped to A$111.77million from A$73.94 million in 1996-97.

Powers said the company's cost-cutting programme, dubbed Project Hercules and aimed at slashing more than A$40 million in costs, was on track.

He told reporters costs to be cut under the programme would be identified by early calendar 1999, but that some elements of the plan would take time to implement.

"We are determined to facilitate a culture which will not allow any slippage going forward," he told shareholders of cost-cutting measures.

Powers, an American, has said he planned to return to his homeland at the end of calendar 1998.Asked by a shareholder whether he could fulfil his duties despite his return to the US, Powers said: "I believe I can."

He said he was not returning for business but for family reasons since his son would be going to school in America.

Fairfax's daily business newspaper the Australian Financial Review said just over a week ago,Powers would split his time between a partnership at San Francisco-based investment house Hellman & Friedman and Fairfax, commuting regularly to Australia.

"I'll spend somewhere between a third and a fourth of my time here," Powers told shareholders.

"If my colleagues don't think I'm doing a good job, they'll have me removed."Powers' predecessor Rodney Price resigned as Fairfax chairman amid criticism that he did not spend enough time on the job.

Brierley Investments Ltd, Fairfax's largest single shareholder with a stake of some 23 per cent, said on May 29 that Price would resign from the board of Fairfax and Brierley Investments to focus on the latter's UK investments.

The next largest shareholder after Brierley is the FXFTrust, a vehicle set up last year to hold the 14.9-per cent stake of Powers' previous boss.

Powers resigned in mid-May as executive chairman of the Kerry Packer-controlled Publishing and Broadcasting Ltd, which owns the top-rating Nine Network television, and was named thechairman of Fairfax less than two weeks later.

The Australian Broadcasting Authority (ABA) immediately said it would investigate whether Powers' appointment implied any violation of cross-media rules.

Australia's cross-media ownership rules forbid anyone to own a television station and major newspaper in the same city.

Packer, Australia's richest man, has long eyed Fairfax as a potential takeover target.

The ABA has yet to issue a report on whether Powers links with Packer are well and truly severed but Powers told shareholders he was confident the ABA would find in his favour.

"I am 100 per cent confident that my serving on the Fairfax board does not violate cross-media laws in any way, shape or form," he aid.