TORONTO (Reuters) - Publishing company Torstar Corp (TSb.TO) reported a first-quarter loss on Wednesday, hurt by a hefty restructuring charge and weak newspaper revenues amid an advertising pullback.
Torstar, which publishes the Toronto Star daily newspaper and the Harlequin line of romantic novels, said it lost C$3.5 million ($3.45 million), or 4 Canadian cents a share, compared with a year-earlier profit of C$15.7 million, or 20 Canadian cents a share.
Chief Executive Robert Prichard said a slowing economy in the province of Ontario is weighing on advertising demand.
“It is most noticeable in national advertising, where the pullback has been sharpest,” he told analysts during a conference call. “Much of the decrease falls directly to the bottom line.”
Investors dumped Torstar shares after the results with the stock falling C$1.27, or 7.4 percent, to C$15.88 on the Toronto Stock Exchange.
The recent quarter included an after-tax charge of C$13.8 million, or 17 Canadian cents a share, related to staff reductions in the newspaper division. The company said the reduction of 160 employees will result in annual savings of about C$12 million.
Torstar said its revenue was C$351.7 million, down 6.8 percent from the year-earlier’s C$377.4 million.
Analysts were expecting earnings of 22 Canadian cents a share and revenue of C$372.5 million, according to Reuters Estimates.
Prichard said that a year ago, the company reported a very strong quarter and warned investors that the growth it posted at the time wasn’t sustainable.
This time, the quarter is weaker than what the company is expecting for the balance of the year, he said.
“Again, we counsel you that the quarter is not indicative of our full-year outlook.”
While its newspaper properties struggled, the Harlequin line of romance novels performed relatively well, even though the unit’s operating profit dipped to C$16.2 million from C$19.1 million a year earlier.
“We remain optimistic Harlequin will deliver growth in underlying earnings this year, unless there’s a major U.S. retail slowdown,” Prichard said.
The company also warned that it will face higher newsprint prices later in the year compared with 2007.
Reporting by Wojtek Dabrowski and Scott Anderson; Editing by Peter Galloway