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Revenues up, profits down for FP Newspapers Inc.
WINNIPEG -- The publisher of the Winnipeg Free Press, Brandon Sun and other Manitoba newspapers delivered higher revenue but lower profit in the first quarter.
FP Newspapers Inc. (TSX:FP) says its first-quarter profit was down about 20 per cent from the same time last year.
The decline was attributed to a decrease in the Winnipeg-based company’s share of earnings from the FP Canadian Newspapers Limited Partnership (FPLP).
FP said its net income fell to $800,000 or 11.7 cents per share for the three-month period, down from $1 million or 13.8 cent in the first quarter of 2011.
FP Newspapers Inc. owns securities entitling it to 49 per cent of the distributable cash of FPLP.
FPLP said its revenue increased by $2 million or 7.9 per cent to $27 million, with the increase due to an acquired printing business and third-party magazines.
Excluding the impact from the acquisition of Derksen Printers in February 2011, FPLP’s revenue would have been up by $1 million — an increase of 4.2 per cent.
The financial results were announced ahead of the company’s annual meeting of shareholders.
They were a big improvement from a $13.1-million loss it recorded in the fourth quarter of 2011, as it wrote down the value of its stake in the FP Canadian Newspapers Limited Partnership.
The newspaper publisher took a $15-million hit related to its stake in the partnership due to a continuation of soft advertising revenues and decreasing newspaper industry valuations.
Most newspapers have been struggling to overcome a widespread change in reading and advertising trends amid increased competition from Internet publications and specialty television services.
The company said on Tuesday that it expects a further decline in advertising revenue in the second quarter, largely due to reduced spending by large national customers.
The company also expects this year’s contributions to its defined benefit pension plan will be higher than in 2011, due to a higher solvency deficit resulting from lower yields on long-term bonds.
The company said it has been advised that it will need to spend an additional $1.3 million on the pension plan, assuming it is allowed to eliminate the solvency deficiency over 10 years rather than the usual five years.
If solvency relief isn’t approved, FPLP says its pension contribution will be $2.2 million higher in 2012 than last year.
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