WINNIPEG – Revenue and earnings in the first quarter of fiscal 2006 say things are still tough at CanWest Global.
While consolidated net earnings were $30 million, compared to $35 million or $0.20 per share in the first quarter of fiscal 2005, those earnings were boosted by a gain of $84 million on the sale of a 26% interest in its newspaper and online assets through the CanWest MediaWorks Income Fund initial public offering (IPO) in October. Net earnings were also negatively impacted by other refinancing charges.
Excluding the effects of these non-recurring charges and comparable charges in the prior year, earnings after taxes would have been approximately $82 million, a 14.6% drop.
CanWest’s consolidated revenues for the quarter decreased by 1% to $860 million and consolidated EBITDA for the quarter ended November 30, 2005 was $239 million, a drop of 17.5% from Q1 2005.
"The benefits of the Company’s five year program of improving its balance sheet and financial flexibility were evident in the quarter as financing costs declined by $21 million over the same period last year. In spite of difficult market conditions for the income trust sector, the successful IPO of our newspaper and online divisions transformed the Company,” said CEO Leonard Asper.
“The IPO enabled the Company to repay $400 million of debt, reduce CanWest corporate debt by $1.4 billion and provides the Company with a vehicle for further acquisitions, which we intend to pursue on an accretive basis."
However, conventional television in Canada, one of the company’s biggest revenue generators, was soft in the first quarter, reflecting a combination of difficult market conditions for the sector, the time lag in which ratings gains achieved over the past two quarters will translate into higher revenues which we anticipate for fiscal 2007 and 2008, and higher program investments. “CanWest’s specialty television channels continued to post healthy profits over last year,” added the release.
“While the advertising market conditions in our international operations were not as strong as past years during which time our operations averaged double digit growth rates in revenues and EBITDA, contributions from our international operations remained solid this quarter,” added the company.
CanWest has international broadcast assets in Ireland, Australia and New Zealand, as well as agreements to acquire broadcasters in Turkey.
"Our outlook for the balance of the fiscal year remains cautious as we expect continued softness in our Canadian conventional television business and stable performance from our remaining operations. In order to re-establish revenue growth at Global, we will continue to invest in programming in order to return it to a position of ratings dominance. Cost containment across all of our businesses remains a top priority. The rebuilding of CanWest’s balance sheet over the past five years will continue to benefit shareholders through lower financing costs while providing the Company additional financial flexibility,” concluded Asper.
