Torstar Q4 profit falls by $40.2 million amid restructuring, lower revenue

TORONTO – Torstar Corp. (TSX:TS.B) reports it had $24.1 million of net income in the fourth quarter, down about 62 per cent from a year earlier as it felt the impact of falling revenue at its media and book businesses.

The owner of the Toronto Star, Harlequin books and other publishing businesses says the fourth-quarter profit amounted to 30 cents per share of net income and 49 cents per share of adjusted earnings.

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

“Results in the quarter continue to be affected by industry challenges in our Media operations and the current economic environment,” said David Holland, Torstar’s president and CEO.

“Looking forward, visibility remains limited for the Media operation. The print advertising environment remained soft in the early part of 2013. We intend to continue to be diligent in seeking out revenue opportunity across our media platform including the introduction of a paywall at the Star. We also expect to adjust the cost structure in the Media operation as we continue to adapt.

“Restructuring initiatives undertaken to date in 2013 across the Media operation are expected to yield annualized savings of $6.6 million.”

He said Torstar’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.

“Across Torstar’s operations, we continue to benefit from our modest leverage as we take the necessary steps to successfully evolve,” Holland said.

The results fell short of analyst estimates compiled by Thomson Reuters. The consensus had predicted 53 cents per share of earnings, before and after adjustments, or about $41 million with $413.65 of revenue.

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.

The company’s biggest newspaper, the Toronto Star, announced Monday that it plans to cut 55 jobs from a staff of nearly 1,000 in response to pressure on its revenue and efforts to cut costs.

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.