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The Canadian Press - ONLINE EDITION

Torstar fourth-quarter profit falls 62 per cent on lower advertising revenues

By: David Friend, The Canadian Press

Posted: 03/6/2013 5:40 AM | Comments: 0 | Last Modified: 03/6/2013 11:55 AM

The Torstar Corp. logo is pictured at the company's annual general in Toronto, on May 6, 2009. THE CANADIAN PRESS/Jim Ross

TORONTO - A decline in advertising sales weighed on the results of Torstar Corp. (TSX:TS.B) in the fourth quarter, the publisher of the Toronto Star said Wednesday after it announced plans to make cuts across its operations earlier this week.

The Toronto-based publisher of newspapers, books and digital content posted a net income decline of 62 per cent to $24.1 million, or 30 cents per share. That compares to $64.3 million or 81 cents per share in the same period the previous year.

Adjusted earnings were 49 cents per share, lower than the 53 cents that analysts were expecting, according to estimates compiled by Thomson Reuters, and below the 70 cents recognized a year earlier.

Shares of the company were down nearly nine per cent, or 70 cents to $7.22, after the earnings report.

Revenue for the three-month period that included the important Christmas and New Year's advertising period fell to $395.7 million — a decline of $29.6 million.

The media segment of its operations saw revenues fall 3.2 per cent to $9.9 million, on lower print advertising revenues.

"Looking forward, the revenue outlook for the media segment in 2013 remains uncertain," chief financial officer Lorenzo DeMarchi told analysts in a conference call.

"With print advertising continued to be challenged by shifts in advertising spending and economic uncertainty, early indications in 2013 are that print advertising revenue remains soft while we do expect digital revenue to grow. Cost reductions remain an important area of focus."

On Monday, the company announced that its biggest newspaper, the Star, plans to cut 55 jobs from a staff of nearly 1,000 in response to pressure on its revenue and efforts to cut costs. The company is currently in discussions to transfer most of its print page design operations to Pagemasters North America, a wholly owned subsidiary of The Canadian Press, the company's spokesman said.

Reporters at the Star yanked their names from stories in Wednesday's edition of the newspaper to protest the cuts.

Torstar also booked an impairment charge of $11 million for its Workopolis job hunt website, due to heightened competition from other job recruitment options and effects on the workforce from the slower economy, it said.

The company's Harlequin book division was affected by a combination of weaker revenue, higher digital royalty rates and a negative impact from foreign exchange. The goal for 2013 is to deliver relatively stable full-year book publishing results assuming global economic conditions do not deteriorate.

A year earlier, Torstar had $64.3 million or 81 cents per share of net income in the fourth quarter and 70 cents of adjusted EPS.

For the full 2012 year, Torstar had $1.485 billion of revenue, down $63.1 million from $1.548 billion in 2011. Net income was $103.2 million or $1.30 per share. A year earlier, net income for the year was $217.7 million or $2.74 per share, although without the sale of Torstar's share of CTV Inc. the 2011 net income would have been $143.1 million or $1.80 per share.

Among Torstar's other holdings is a one-third interest in The Canadian Press news agency.

Note to readers: This is a corrected story. An earlier version included incorrect revenue for the fourth quarter. The previous numbers referred to full-year revenue.

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