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Winnipeg Free Press - PRINT EDITION

FP Newspapers revenue up, but profits down for first quarter

By: Staff Writer

Posted: 05/16/2012 1:00 AM | Comments: 0

FP Newspapers Inc. delivered higher revenue but lower profit in the first quarter.

The publicly traded company (TSX:FP) reported Tuesday 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), which publishes the Winnipeg Free Press, Brandon Sun and other Manitoba newspapers.

FPI said its net income fell to $800,000 or 11.7 cents a share for the three-month period, down from $1 million or 13.8 cents 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 FPLP.

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 it expects a further decline in advertising revenue in the second quarter, largely due to reduced spending by large national customers.

Bob Cox, publisher of the Free Press, said the company is constantly on the lookout for new sources of revenue.

Digital revenues were higher by $0.1 million or 20.7 per cent for the quarter to $719,000.

During the quarter, the company also received a revenue boost from third-party publishing of magazines for Travel Manitoba and sales of the Winnipeg Jets 2011/12 officially licensed medallion collection.

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 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.

FP Newspapers Inc. shares closed up a penny on Tuesday to $4.15.

-- staff

Republished from the Winnipeg Free Press print edition May 16, 2012 B9

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