Keith Collister, Gleaner Writer
Gleaner shareholder, Stuart Lacey (left) makes a point at the company's annual general meeting last Thursday. - NORMAN GRINDLEY/DEPUTY CHIEF PHOTOGRAPHER
THE IMPACT of two hurricanes and higher operating costs helped to slow turnover and erode the Gleaner Company's profit last year, but the newspaper's chairman and CEO, Oliver Clarke, says that its publications remain dominant in the Jamaican market.
"At the current time, many advertisers are having a problem pushing their retail volumes," Mr. Clarke told shareholders at the company's annual general meeting last Thursday at its North Street office in downtown Kingston. "That is having an effect.But our market share hasn't been eroded," he added.
Mr. Clarke was reporting to shareholders on a 48 per cent decline in net profit last year, from $358 million in 2004 to $187 million for 2005 as well as an $8 million loss in this first quarter of 2006, in the context of the higher costs in operating the business and difficulties in the overseas markets.
INCREASED COSTS
Despite the problems, overall turnover increased last year by 12 per cent to $3.29 billion, with the critical advertising segment growing by a similar percentage to $1.87 billion. Additionally, there was a nine per cent increase in the second-largest segment, circulation revenue, to $746 million.
But the growth in revenues in 2005 was impacted by increased cost of sales from $1.61 billion to $1.8 billion. Gross profit (sales minus cost of sales) increased from $1.33 billion to $1.49 billion.
Other costs, particularly distribution and administration expenses, all rose from a combined $1.29 billion to $1.41 billion, reflecting among other things, the increased cost of fuel and utility, particularly in the second half of the year.
According to group financial controller Rudolph Speid, 'core profits' (excluding employees' benefit asset and other operating income) were marginally up in 2005 when compared to 2004.
However, a sharp fall in the contribution of employees' benefit asset from $224 million to $55 million, and other operating income from $294 million to $191 million, lead to overall fall in profit. The fall in other operating income was impacted by the decline in interest rates.
Mr. Clarke noted that Interna-tional Financial Reporting Standards, adopted by Jamaica in 2004, required the Gleaner Company to credit to the profit and loss account a portion of the surplus in the pension scheme. This, he said, "materially" impacted the group's comparative results for both years.
"The portion of the surplus credited, however, is not realised profit, as it represents future economic benefits to be derived from a reduction in the company's contribution to the pension scheme," Mr. Clarke said.
He advised that the trend for the U.K.-based Voice was "right in terms of tightening expenses" and he expected it to "return to viability by the end of the year," while the other 'small' North American assets were on an improving trend.
VOTED FOR CHANGE
The loss of $8.3 million for the first quarter of 2006 was, according to Mr. Clarke a "follow through from the difficulties of last year" but he expected that "things would turn for the better" this calendar year.
At the annual meeting, the shareholders voted to change the Gleaner's articles of association to bring it in line with the new Companies Act. One important provision allows the company to buy back its shares if it chooses to do so.
Retiring directors Christopher Roberts, Douglas Orane and H. Winston Dear were reappointed to the board.
