Postmedia swings to $700,000 profit despite 21% drop in revenue

Photo: The Canadian Press

The owner of Canada's largest group of newspapers says it earned $700,000 in net profits in its second quarter, an improvement from the same time a year before despite a 21-per-cent revenue decline.

Toronto-based Postmedia Network Canada Corp., publisher of the National Post and other daily newspapers, says its revenue for the three months ended Feb. 28 was $106 million, down from $134.2 million a year earlier — before the economic impact of COVID-19 was a major factor.

Postmedia says this year's second-quarter profit compared with a year-earlier net loss of $12.8 million.

It says the change was primarily due to gains on derivative financial instruments and foreign exchange, higher operating income and lower expenses, partially offset by a $7 million impairment expense.

The revenue decline was attributable to a 29 per cent decrease in print advertising, 21 per cent drop in digital revenue and an 11.6 per cent fall in print circulation revenue.

At the same time, it cut operating expenses by nearly 20 per cent that is expected to save about $5 million per year.

“Our second quarter represents continued progress on our strategy with measured optimism for the future,” CEO Andrew MacLeod said in a statement accompanying the results.

Postmedia says it will reduce debt by $17 million by the end of May, resulting in a decrease of more than 70 per cent of its first lien debt to $67 million from $225 million since its 2016 recapitalization.