July 11, 2008 / 12:15 PM / 10 years ago

Canwest swings to loss, but revenue jumps, stock up

TORONTO (Reuters) - Canwest Global Communications Corp CGS.TO, Canada’s biggest media company, swung to a third-quarter loss on Friday as restructuring and other expenses rose, but revenue climbed 15 percent and its battered shares jumped sharply.

CanWest Global Communications Corp.'s President and CEO Leonard Asper arrives for the Canwest Media works annual general meeting in Toronto January 11, 2007. REUTERS/J.P. Moczulski

Canwest, which owns the Global television network, a national chain of newspapers and a roster of specialty-TV channels, said it lost C$28.4 million ($28.2 million), or 16 Canadian cents a share, in the three months ended May 31. That was down from a profit of C$8.4 million, or 5 Canadian cents a share, in the same period a year earlier.

However, the Winnipeg, Manitoba-based company said its adjusted results — a figure closely watched by investors — showed a profit of C$13 million, or 7 Canadian cents a share.

The adjusted results exclude items such as foreign currency and interest swap gains or losses, foreign-exchange items, investment gains, losses and writedowns.

The report appeared to please investors, as Canwest shares jumped 15 percent, or 30 Canadian cents, to C$2.32 on the Toronto Stock Exchange. A year ago, the stock was trading at C$9.78.

“You are looking at a company that has, certainly on the operational side, not covered itself in glory,” said Gavin Graham, chief investment officer at the Guardian Group of Funds in Toronto.

“It looks like ... it is actually starting to show some improvement, which, heaven knows, is about time.”

Canwest said its interest expense rose to C$78.7 million from C$45.3 million during the quarter. As well, it took C$24.7 million in investment losses and writedowns.

Total revenue in the quarter was C$851.8 million, up 15.4 percent from C$738.1 million the year before, due in part to growth in its specialty channels and publishing assets.

Analysts had expected the company to earn 7 Canadian cents a share on revenue of C$847.9 million, according to Reuters Estimates.

The company said that although the performance of its conventional TV business will be “somewhat dependent” on advertising markets and in particular on the impact of the Beijing Olympic Games in the fourth quarter, “we continue to work on strategies to improve the overall business model going forward.”

In the third quarter, Canwest closed four small, unprofitable operations, and it will continue to assess its asset base to ensure it is operating and investing in the assets that have the most potential.

The company said it was looking to sell British radio properties.

($1=$1.02 Canadian)

Reporting by Wojtek Dabrowski and Jennifer Kwan; Editing by Peter Galloway

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