Gleaner posts respectable first quarter

Continued prudence in cost management, combined with a $23-million boost in investment interest booked to financial income, resulted in a 53 per cent jump in The Gleaner Company's pre-tax profit for the first quarter to $59 million. The group's trading profit improved by 22 per cent to $59 million despite sales holding flat in a weak economy.

After a tax charge of $16 million, the company posted a net profit of $43 million, a 41 per cent increase on the corresponding period in 2010.

"The team was able to maintain its focus on operational efficiencies to deliver respectable results in what is usually a challenging quarter for media. We were fortunate also to have a boost to our profit from interest income accrued on our pension receivable," said Managing Director Christopher Barnes.

For the first three months of this year, the company posted a one per cent increase in revenue to $796 million. That performance was in the context of an economy that was only beginning to emerge from 14 consecutive quarters of negative growth, plus the seasonal first-quarter dip in advertising, exacerbated by weak business confidence.

During the period, the company's cost of sales increased by $19 million, or five per cent, but it was able to keep a tight lid on its other operating expenses which, at $395 million, increased by a mere half of one per cent.

profit return

The upshot was that the media company returned profit on its operations of $39 million, a two-and-half per cent increase on the $38 million for January to March 2010.

Last year, The Gleaner Company wound up its long-standing defined benefit pension scheme, whose near $3-billion surplus was shared between members, 54 per cent, and the company, 46 per cent. The Gleaner's portion of this surplus translated to $1.3 billion, a balance upon which interest continues to accrue while the asset transfers are being finalised.

"We have to remain cautious in making any projections based on these results, as market events like the recent developments between two of our major telecoms advertisers remind us of just how dynamic it can get in a very challenging economy," Barnes said. "Our balance sheet strength and liquidity, however, provide an advantage in, and will continue to facilitate, our quest for creating shareholder value."