MONTREAL – Cogeco Inc. reports that second quarter revenue increased by 32.7% to $458.5 million, and by 19.3% in the first six months to reach $825.1 million. Earnings from continuing operations for the quarter that ended February 28 were $58.5 million compared to $31.1 million a year earlier. It mostly attributes the increase for the quarter to the operating income from the recent acquisitions of ABB and Peer 1.
If the two acquisitions are not factored in, profit dropped by about $25 million in the quarter to $56.5 million compared to $81.5 million for the same period of the previous fiscal year. For the first half of fiscal 2013, profit for the period amounted to $103.6 million also down compared to $129.4 million for the comparable period of prior year.
Cogeco attributed the decline for both periods to last year's profit from the Portuguese subsidiary, Cabovisao – Televisao por Cabo (which it sold off last January), as well by the increases of operating income and acquisition costs all related to ABB and Peer 1 and the income tax expense increase. In its outlook, Cogeco expects profit for the year to come in at $205 million compared with earlier expectations of $225 million, with operating margins to decrease slightly from 46.2% to 45.2%, mainly as a result of the Peer 1's expected financial results for the seven-month operations.
Cogeco Cable also reported better retention numbers for its basic cable (a loss of 4,896 this quarter compared to 9,111 last year) even as it faced increased competition from Bell’s IPTV footprint. In its earnings conference call to investors, Louis Audet, President and chief executive officer noted that it was able to retain more of its base without using any “unusual promotions” according to a transcript from Seeking Alpha.
“The competitor – competitors remain vigorous. But we continue to perfect our tools to make sure we anticipate what customers want to do, attempt to please them and retain them as much as we can. And I think these are the major things that you're seeing but the competitiveness in the market has not reduced,” explained Audet.
PSU net additions though were lower than in the comparable period of the prior year (7,463 this quarter compared to 12,280 last year) mainly as a result of service category maturity, competitive offers and tightening of our customer credit controls and processes said Cogeco.
In a statement, Audet said Cogeco Cable continues “along a path of steady growth, both organic and through acquisition. Results for ABB's first quarter as a part of Cogeco Cable had been in line with expectations. I am confident in this subsidiary's ongoing ability to perform and contribute favourably to Cogeco's objectives.”
"Regarding Cogeco Diffusion Inc., we are pleased with our radio business ratings confirming its leadership in the Montreal market and good performance in most of our other markets across the province of Quebec. Furthermore, our transit advertising business, Cogeco Metromedia, is delivering results according to plan," concluded Louis Audet.
The company also lowered its earnings guidance for its 2013 financial year to a profit of $69 million attributable to owners of the corporation, down from an earlier estimate of $75 million.
