Winnipeg Free Press - PRINT EDITION
FP Newspapers posts $7.1-M quarterly gain
LOWER newsprint and delivery costs led to an increase in second-quarter earnings for the company that owns the Winnipeg Free Press, Brandon Sun and the Canstar community newspapers.
FP Canadian Newspapers Limited Partnership (FPLP) said Wednesday it had earnings before interest, taxes, depreciation and amortization (EBITDA) of $7.1 million for the three-month period that ended June 30.
That was a gain of 7.4 per cent, or $500,000, from last year's second-quarter EBITDA total.
FPLP said the increase in EBITDA, combined with a reduction in interest expense associated with the settlement of subordinated notes in the final quarter of 2009, enabled FPLP to increase its second-quarter net earnings to $4.9 million from $2.8 million a year earlier. In the past, FPLP net earnings were calculated after the deduction of an expense for interest paid into the income fund. But money from net earnings is now paid directly to the fund instead of being deducted as an interest expense prior to the calculation of net earnings.
It was also announced that FP Newspapers Income Fund, which owns 49 per cent of FPLP, saw its second-quarter net earnings dip to $2.0 million, or 29.7 cents per unit, from $2.2 million, or 31.5 cents per unit.
The fund said the decrease was primarily due to costs associated with its conversion to a corporation, which was approved by its unitholders on May 5.
The improved second-quarter earnings at FPLP were due in large part to a 5.3 per cent reduction in operating expenses, which declined by $1.2 million to $21.9 million.
Dan Koshowski, the company's vice-president of finance and administration, said a 16.1 per cent decline in newsprint costs accounted for $400,000 in savings. Delivery costs also declined by $700,000, or 14.5 per cent, mainly due to the Free Press eliminating Sunday home delivery last year and FPLP selling its Thunder Bay flyer distribution operation.
The savings helped offset a 2.5 per cent reduction in revenues for the quarter, which fell by $700,000 to $28.9 million. Koshowski said classified-advertising revenue was down by 13.2 per cent, flyer-distribution revenue was off by 5.5 per cent, and revenue from promotions and services decreased 24.2 per cent. Those declines were partially offset by a four per cent increase in display advertising revenue, which is the company's largest advertising-revenue category. It grew by $500,000 to $12.5 million.
Free Press publisher Bob Cox said Free Press and Brandon Sun managers continue to work on the pending consolidation of the production operations of the two Manitoba dailies. That will result in further cost reductions for FPLP.
Beginning Oct. 1, the Free Press printing plant will also print the daily edition of the Brandon Sun. Cox said the workforce at the Sun will be reduced by about 40 per cent as a result of the changes. But thanks to some technological upgrades, the Free Press should be be able to handle the extra work without having to hire additional staff.
-- Staff
Republished from the Winnipeg Free Press print edition August 12, 2010 B6
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