Torstar Q1 revenue down slightly; earnings drop 54% to $9.8 million
Related Symbols: T.TS.NV.B
5/3/2006 8:03:00 AM
TORONTO (CP) - Newspaper and romance-novel publisher Torstar Corp. (TSX:TS.NV.B) reported sharply lower profits in the first quarter as revenue declined slightly and a year-earlier currency bonanza was reversed.
The owner of the Toronto Star, along with other Ontario daily and community papers and the Harlequin global fiction factory, said Wednesday its net earnings were $9.8 million or 13 cents a share in the three months ended March 31.
That was down from $21.1 million, 27 cents per share, in the year-ago period, which benefited from one-time currency gains and other items.
Revenue declined to $357.1 million from $358.8 million. Operating profit dropped to $20.7 million from $36.2 million.
Newspaper operating profit was down $2.3 million as higher costs for infrastructure, expansion and new products more than offset higher revenue.
Book publishing operating profits fell $9.5 million, "all as a result of the strengthening Canadian dollar and the non-recurrence of the significant gain on the 2005 U.S.-dollar hedge," Torstar said.
"In total, our newspaper results are short of our goals," CEO Robert Prichard told analysts on a conference call.
At the Star, Canada's largest-circulation newspaper, revenue fell short amid slack advertising linage rates, but "good cost management" kept the Star's profit "essentially flat," excluding startup costs of the Scoop celebrity sheet, Prichard said.
The profit decline included a $2.4-million after-tax restructuring provision at the Star's printing plant north of Toronto. This restructuring reflects "absolute determination" to reduce costs, Prichard said, and "is a very positive achievement even though it creates a drag on this quarter."
Torstar's other dailies, including the Hamilton Spectator and The Record of Kitchener, "performed very well," he said, with Kitchener-Waterloo "very, very strong - it may well be the strongest market in Ontario at present."
A long strike at Hamilton Web Printing "is behind us" after union ratification of a new contract Monday.
At the Metroland community newspaper group, profits were down despite revenue growth but "we expect the year will be stronger than the quarter," after a strong March followed weakness in January and February.
Torstar's overall newspaper revenue grew 3.5 per cent.
Prichard noted that Torstar continues to spend to build its online business, and "we're getting good increase in traffic; Workopolis is performing well."
At Harlequin, underlying profits were flat, which "reflects continued stabilization of the business," Prichard stressed.
"The foreign exchange impact is large, but it does not speak to the underlying business - we're in the book business, not the currency business."
Year-ago results had been boosted by $9.4 million in gains from U.S.-dollar hedge contracts, $6.1 million from the strengthening Canadian dollar and a $900,000 gain from the sale of a property.
Anticipating analyst questions about the possibility of converting Torstar into an income trust, Prichard said that "at the present time there is no change in our position," which is that "we continue to monitor the options we have and the changing landscape as it evolves."
On the Toronto stock market early Wednesday, Torstar shares were down $1.16 at $21.89.
[Harry: The key take away here is the lineage rates
are down. This mean the economy is not so rosy as
is being portrayed at least in East Canada.] |
