Gleaner reports lower half-year profit

With overall sales held flat by a tight economy, and investment income tracking behind last year, The Gleaner Company's profit for the six months to June 30 fell by 70 per cent, to $42 million.

For the June quarter, revenue, at $841 million, was up a half of a per cent compared to the same period last year, while for six months January to June, revenue was down one per cent, at $1.6 billion.

"The Company continues to operate in a difficult environment for media businesses. We, however, did well during this period, to hold our core business revenue flat, and to limit increases of input costs to those caused mainly by external factors." said The Gleaner's managing director, Christopher Barnes. "The harsh environment for revenues was especially apparent in our radio business where a shrinking advertising pie in the market has forced us to look harder for innovative ways to drive sales." Barnes noted that the new cadre of hosts for 'Independent Talk' and the addition of 'Justice with Malahoo Forte' to the Power 106 line-up have served well to counter the loss of Ronnie Thwaites and Wilmot 'Motty' Perkins as hosts early this year.

Profit from operations slipped by nearly two-thirds, to $24 million, from $71 million last year, as Group cost of sales rose by 4.5 per cent, or $35 million while other costs, including distribution and administrative expenses, were held flat.

Finance income was $38 million, a drop of 69 per cent from $125 million last year. Included in the prior half year accounts however, was a pre-tax interest income carry over of $66 million from 2010 arising from the company's pension receivable. The company's Defined Benefit Pension Fund was discontinued in 2010 and replaced with a Defined Contribution Fund.

Second interim dividend

In spite of the foregoing, with roughly $1.5 billion in near cash assets, the media conglomerate has announced a second interim dividend of $0.03 a share, or $36 million, to be distributed on September 28 to shareholders on record as September 7. This follows a first interim dividend of $0.05, or $60 million, it paid out in March.

Asked about the remainder of the year and future growth prospects, Barnes said: "We have seen increased market activity during the recent Olympics and the celebration of Jamaica 50. Jamaicans have reacted tremendously to the content we have been putting out during this time. We have further been buoyed by recent survey results which confirm our core business dominance. We are in active pursuit of revenue growth projects and our multimedia transformation is well under way. The culture of online use is rapidly changing in Jamaica and we are creating the products and platforms to capitalise on this change. We recently introduced to Jamaica several new and improved digital products in our BlackBerry mobile apps, gofirstlook.com, video advertising online, our epaper, and, in the last few weeks, digjamaica.com, where you can find all you need to know about Jamaica on one website. We expect improvement going forward to year-end and beyond, as we strive to deliver shareholder value. The commitment from staff to this end has been nothing short of amazing."

The managing director also pointed to near cash assets placing The Gleaner in good stead to take advantage of any opportunities for investment.

The Gleaner last traded on the Jamaica Stock Exchange at $1.50, valuing the virtually debt-free company at $1.8 billion.