Archives for May 9, 2019

Company reported a loss of $14.5 million in the same quarter last year

Torstar Corp. had a smaller loss in the first quarter than a year ago as cost reductions and provincial tax credits partly offset weaker revenue from advertising and flyer distribution, the media company said Wednesday.

Its loss attributable to shareholders amounted to $7.4 million or nine cents per share. That compared with a loss of $14.5 million or 18 cents per share in the same quarter last year.

During the quarter, Torstar — publisher of the Toronto Star and other newspapers — had just under $116 million in revenue from all operating segments in three months ended March 31, down from nearly $129 million a year earlier.

Chief executive John Boynton told analysts in a conference call before the company’s annual shareholder meeting that Torstar had made “good progress” towards developing new revenue streams from digital media.

“We ended the quarter with over 15,000 digital-only subscribers to the Star, and announced a partnership with Apple which has the potential to … generate additional subscription revenue from a broader national audience,” Boynton said.

“The results in the quarter, however, continue to reflect ongoing challenges in the print advertising market but were augmented by the benefit of an $18-million digital media tax credit.”

The Ontario digital media tax credit, which has been discontinued, was designed to offset the cost of salaries paid by qualified media companies, which include Torstar.

Boost from Ontario tax credit

Torstar chief financial officer Lorenzo DeMarchi told analysts that the company has submitted claims for an additional $39.6 million of the tax credits, and is awaiting further approvals from the Canada Revenue Agency.

The CRA is expected to complete its reviews for half of that amount later in 2019 and the balance in 2020, he said.

As for a new federal refundable tax credit, covering 25 per cent of salaries and wages paid to eligible newsroom employees of qualified news organizations, DeMarchi said Torstar is still assessing the potential benefit.

“However, it’s too early at this stage to say with any certainty whether or not we will qualify and to what extent,” DeMarchi said.

Similarly, Boynton said it’s too soon to quantify what benefit Torstar will receive from its new partnership with Apple Inc., announced in March a few days before the quarter ended.

“I think it will take multiple quarters to see what our share of the revenue is going to be,” Boynton said.

“We have early indications in terms of the amount of people that have subscribed to the Apple service and the unique visits and amount of time people are spending on the articles, but we don’t have visibility into the overall performance of the application and therefore we don’t know what our share of the revenue will be.”

Torstar has been working for several years to transform its business as competition from digital and social media attracts a growing share of audience participation and advertising revenue.

Analysts expected loss of about 15 cents per share

Print advertising accounted for $41.2 million of revenue, or 31 per cent of the total, down from just under $52 million in the first quarter of 2018. Flyer distribution revenue dropped to $24.4 million from $26.1 million. Revenue from print and digital subscribers edged up to $29.6 million, or 23 per cent of total revenue, from $29.5 million.

Meanwhile revenue from digital advertising fell to $24.4 million from $28.4 million, due in part to the sale of its Workopolis business last year. Digital advertising as a share of total revenue held steady at 19 per cent.

On an adjusted basis, Torstar says it lost six cents per share in the first quarter of 2019 compared with an adjusted loss per share of 20 cents in the first quarter of last year.

Analysts on average had expected a loss of 15 cents per share for the quarter, according to Thomson Reuters Eikon.

In addition to the Toronto Star, the company owns daily, community and commuter newspapers in numerous communities and a 56 per cent interest in VerticalScope, a Toronto-based digital media company.

Canada Mortgage and Housing Corporation data show seasonally adjusted rate up 22.6%

The pace of housing starts in Canada picked up in April as they rose more than 20 per cent compared with March, fuelled by the start of work on new multi-unit projects such as condominiums, apartments and townhouses.

Canada Mortgage and Housing Corp. said Wednesday the seasonally adjusted annual rate of housing starts increased to 235,460 units in April, up 22.6 per cent from 191,981 in March.

Economists had expected an annual pace of 196,400, according to Thomson Reuters Eikon.

Priscilla Thiagamoorthy, economic analyst at BMO Capital Markets, said builders won’t be packing away the hammers any time soon.

“Although the Canadian housing market slowed at the start of the year, the latest data suggest the downward momentum has stabilized and could even be picking up again,” Thiagamoorthy wrote in a report.

Underlying demand remains healthy amid solid demographic trends and a strong labour market.

– Priscilla Thiagamoorthy, analyst, BMO Capital Markets

“Underlying demand remains healthy amid solid demographic trends and a strong labour market.”

The overall increase in the pace of housing starts comes as the annual pace of urban multiple-unit projects such as condominiums, apartments and townhouses increased 29.6 per cent to 175,732 in April.

Single-detached urban starts increased six per cent to 44,655.

“Signs of stabilization in at least some major resale markets and ongoing strength in homebuilding — particularly the multi-unit segment — suggest the housing sector is shifting to a more neutral force in Canada’s economy after acting as a sizable drag last year,” wrote Josh Nye, a senior economist at Royal Bank.

Multi-unit projects up

The growth in the pace of housing starts was helped by the strength of starts of multi-unit projects in Ontario, B.C. and Alberta.

Compared with March, the overall pace of starts in Ontario were up 46 per cent, while B.C. gained 51 per cent and Alberta improved 36 per cent.

Rural starts were estimated at a seasonally adjusted annual rate of 15,073 units.

The six-month moving average of the monthly seasonally adjusted annual rates was 206,103 in April, up from 202,420 in March.

Results in major cities were mixed.

Toronto housing starts were slightly lower in April mainly because of lower condominium and single-detached home starts. Starts in the Quebec metropolitan area have been trending downward since the beginning of the year, mainly because of a decline in construction of new rental units.

Starts were up in Calgary due mostly to a year-over-year increase in row-home construction. In Vancouver, starts trended higher despite a year-over-year decline. Year-to-date multi-family units increased three per cent compared to the same period in 2018, the report said. 

The energy sector helped lift Canada’s main stock index in late-morning trading, while the price for oil climbed higher.

The S&P/TSX composite index was up 66.70 points at 16,424.45.

In New York, the Dow Jones industrial average was up 95.60 points at 26,060.69. The S&P 500 index was up 7.57 points at 2,891.62, while the Nasdaq composite was up 23.98 points at 7,987.74.

The Canadian dollar traded for 74.31 cents US compared with an average of 74.21 cents US on Tuesday.

The June crude contract was up 76 cents at US$62.16 per barrel and the June natural gas contract was up 7.3 cents at US$2.61 per mmBTU.

The June gold contract was down US$1.50 at US$1,284.10 an ounce and the July copper contract was down 0.2 of a cent at US$2.78 a pound.

Canada’s two largest railways say they moved a record amount of grain out of Western Canada in April.

Canadian National Railway says it shipped 2.72 million tonnes of grain, while Calgary-based rival Canadian Pacific Railway says it moved 2.64 million tonnes.

Montreal-based CN says its grain shipments for the month compared with a three-year average of 2.23 million tonnes.

Allen Foster, CN’s vice-president of bulk, says the 21.1 million tonnes of grain moved in the first nine months of the crop year was 8.2 per cent or 1.6 million tonnes above the three-year average.

Meanwhile, CP Rail says its April shipments beat the previous monthly high from last October. Train lengths and weights were the best April in the railway’s history.

Both railways also say they have ordered new hopper cars to support increased capacity.