WINNIPEG, MANITOBA- FP Newspapers Inc. (“FPI”) (TSX VENTURE:FP) announces financial results for the quarter ended March 31, 2017. FPI owns securities entitling it to 49% of the distributable cash of FP Canadian Newspapers Limited Partnership (“FPLP”).
First quarter operating results of FPI
FPI reported net earnings of $0.2 million for the three months ended March 31, 2017, compared to net earnings of $0.3 million for the same period last year.
First quarter operating results of FPLP
FPLP’s revenue for the three months ended March 31, 2017 was $18.2 million, a decrease of $1.4 million or 7.3% from the same three months in the prior year. FPLP’s print advertising revenues for the three months ended March 31, 2017 were $10.3 million, a $1.3 million or 11.5% decrease compared to the same period last year. FPLP’s largest advertising revenue category, display advertising including colour, was $5.9 million, a decrease of $1.2 million or 17.2% from the same period in the prior year, primarily due to decreased spending in the local and national automotive, financial and retail categories, partly offset by increased spending in the travel category. Classified advertising revenues for the first quarter decreased by $0.3 million or 16.8% compared to the same period last year, primarily due to lower spending in the real estate and employment categories. Flyer distribution revenues increased by $0.2 million or 7.0% compared to the first quarter in 2016, primarily due to an increase in flyer volumes and higher rates.
Operating expenses for the three months ended March 31, 2017were $17.3 million, a decrease of $1.2 million or 6.6% compared to the same quarter last year. Employee compensation costs for the first quarter decreased by $0.8 million or 9.0% from the same period in the prior year, primarily due to a reduction in the number of employees across all of our business units. Newsprint expense for FPLP’s own publications for the first quarter decreased by $0.1 million or 5.6% compared to the same period in the prior year, primarily due to lower volumes. Delivery expenses for the three months ended March 31, 2017 decreased by $0.2 million or 6.0%, primarily due to the cost savings related to the consolidation of the carrier depots.
FPLP’s net earnings were $0.6 million for the three months ended March 31, 2017, compared to $0.8 million for the same period last year.
EBITDA(1) for the three months ended March 31, 2017 was $1.7 million compared to $2.2 million for the same period last year, a decrease of 22.1%. EBITDA(1) margin for the three months ended March 31, 2016 was 9.4%, compared to 11.1% in the same period last year.
Finance costs for the three months ended March 31, 2017 decreased slightly, primarily due to the lower level of debt outstanding.
The print advertising market will continue to be challenging going forward. To date in the second quarter, print advertising revenues are trending at similar year over year levels that were seen in the first quarter. On May 3, The Outlet Collection Winnipeg opened and is Manitoba’s first pure outlet shopping destination. The new facility offers more than 570,000 square feet of shopping featuring over one hundred popular outlet brands. Winnipeg Free Press and Canstar Community News advertising sales staff will be making every effort to generate new advertising partnerships in the coming months.
The pension solvency relief measures finalized in early April will provide significant cash flow relief for the remainder of the year. Since we were required to comply with higher pre-relief funding levels for the first four months of the year, company past service contributions for the months of April thorough December will total $0.2 million compared to $2.7 million for the same 8 month period last year.
A committee made up of senior managers at the Winnipeg Free Press, Unifor representatives and unionized departmental employees has been formed and has held a series of meetings to discuss the pressures the continued revenue declines are having on the business and what changes might be possible to help deal with these pressures. The meetings have included discussions around possible changes to the current collective bargaining agreement for inside workers at the Winnipeg Free Press which is scheduled to end on June 30, 2018. The Committee has agreed on a tentative agreement and unionized employees will be holding a ratification vote on Saturday May 13, 2017.
Source: FP Newspapers Inc.