Gleaner awaiting economic up turn

Profit at Gleaner Company, for the three months to September is up strongly, but that’s coming from a low level for 2013. Most of the improved figures came from a big upswing in finance income and not from the main activity of media.
Profit after tax rose 271 percent, to $16 million, up from just $4 million in 2013, and for the six months, growth was up 301 percent to reach $58.6 million from $14.6 million, but that is just 5 cents per share. Profit margins improved in 2014 over 2013 rising only 4 percent for the nine months and 11 percent in the quarter, but administration and other cost rose 11 percent in the quarter and a lesser 5 percent in the year to date period.
The other good news is the vast improvement in the results of the subsidiaries, for the year so far, having produced a profit of $10.5 million in the September quarter from a loss of $19 million last year and a reduced loss of $2 million for the year to September compared with a loss of $31 million in 2013.
Sales revenue remains flat, at just over $813 million for the 2014 and 2013 quarters and up a mere 2 percent for the nine months to September, at $2.43 billion. The economic conditions the country is in, coupled with stringent fiscal policies being pursued by the government, is not the environment that the media house relishes. The situation has been made worse by Claro mobile exiting the system, a few years ago. The acquisition of Flow by Cable & Wireless could well put more pressure on revenues down the road, depending on how the acquisition is handled. In the end, the acquisition will mean less advertising spend, nationally by the telecom sector if the acquisition goes through. Another negative, is that newspapers are not the in thing anymore, with newer readers preferring the internet, but they are not yet prepared to buy news on line the same way that news was sold in the past. Although, the Gleaner owns a radio station its profitability is at best small and can’t deliver much to the bottom line.
The company’s stock price is low compared to its historical norm, but compared with others in the market, it can be considered overpriced at a PE that is around 10 times current year’s earnings, with no sign of a major turnaround in its operations soon.