April 8, 2009 / 2:00 PM / in 9 years

Shaw Communications profit hit by smaller tax gain

OTTAWA (Reuters) - Cable and telecom company Shaw Communications Inc (SJRb.TO) said on Wednesday that quarterly profit declined due to smaller tax gains, but that earnings excluding nonoperating items were higher.

The results matched expectations, said National Bank Financial analyst Greg MacDonald, and demonstrate a resilient Canadian cable sector.

“The message for the stock is that Canadian cable is a safe haven,” MacDonald said in a note.

“We have maintained that Canadian cablecos will likely see a slowdown in subscriber growth from the weakening economy, but that they will be much less impacted than their U.S. and European counterparts.”

Calgary, Alberta-based Shaw told investors in March that it added more than 100,000 digital-TV subscribers in its second quarter, record growth despite the economic slump.

On Wednesday, Shaw announced profit of $156 million, or 36 cents a share, in the quarter, ended Feb 28. That was down from a profit of $299 million, or 69 Canadian cents a share, a year earlier.

It recorded a tax recovery of $23 million in the quarter, compared with $188 million in the same period last year. Excluding nonoperating items, Shaw said it would have made a profit of $128 million, up from $113 million.

Shaw said quarterly subscriber growth was “solid” across its units. It gained nearly 4,300 basic cable subscribers, 26,130 Internet customers, and close to 106,500 digital-TV customers. It also added 50,850 digital phone lines and nearly 3,660 satellite-TV subscribers.

Revenue rose 10 percent to $839 million from $763 million a year earlier, reflecting customer gains and higher prices.

Free cash flow was unchanged at $138 million.

“We believe the resilience of our business and the strength of our strategy should continue to produce solid operational and financial results even in the face of these weaker economic conditions,” said Chief Executive Jim Shaw in a release.

“We remain on track to achieve our financial guidance for the year, which includes generating free cash flow of at least $500 million.”

Shaw shares were unchanged at $19.31 on the Toronto Stock Exchange and down 2 cents at $15.60 on New York on Wednesday.

Reporting by Susan Taylor; editing by Peter Galloway

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