TORONTO (Reuters) - Torstar Corp (TSb.TO) reported a higher quarterly profit on Thursday as growth at its Harlequin romance-novel and Metroland regional-newspaper divisions and the sale of some real estate helped results, sending its shares higher.
But the Canadian book and newspaper publisher warned that second-half growth would be hampered by Ontario’s soft economy and rising newsprint, distribution and gas costs.
Investors appeared to focus on the positive results as Torstar’s shares jumped C$1.00, or 9.3 percent, to C$11.70 on the Toronto Stock Exchange.
“The share price bounce on second-quarter numbers is reasonable given solid Harlequin and Metroland results -- removing some fear about Metroland momentum -- but mostly because selling was overblown after the weak first quarter,” said CIBC World Markets analyst Bob Bek.
Torstar, well known as the publisher of the Toronto Star daily newspaper, earned C$37 million ($36.2 million), or 47 Canadian cents a share a share, up 23 percent from C$30.1 million, or 38 Canadian cents a share, for the same period last year.
At the Star, Canada’s largest daily, advertising revenue dropped 10.5 percent in the quarter, “with the national and retail advertising categories continuing to be challenging,” the company said.
“The weakness at the Star was also very much expected and within the range of expectations,” Bek said.
The 2008 quarter included an after-tax gain of C$5.6 million, or 7 Canadian cents a share, which included the sale of excess land.
Revenue for the quarter rose to C$399.5 million from C$397 million for the same period last year.
“The Southern Ontario economic outlook continues to cause uncertainty for Torstar’s newspapers. Cost challenges for the newspapers include the expectation of higher year-over-year newsprint pricing in the last six months of 2008 and increasing distribution costs as gas prices continue to rise,” the company said in a release.
The company, which said earlier this year it was eliminating about 250 positions through voluntary and involuntary cuts, expects savings of about C$7 million in the second half of the year.
Reporting by Wojtek Dabrowski; editing by Peter Galloway