Shaw Communications Q1 Profit Down 7%, Results Miss View

(RTTNews) - Diversified Canadian communications company Shaw Communications, Inc. (SJR, SJR.B.TO) on Wednesday reported a 7 percent decline in profit for the first quarter from last year, as an increase in revenues was more than offset by higher amortization and an equity loss of a joint venture.

Both revenues and earnings per share for the quarter missed analysts' expectations. Looking ahead, the company maintained its outlook for fiscal 2015 operating income and free cash flow. The company also hiked its annual dividend by 8 percent.

The Calgary-based company reported net income attributable to equity shareholders for the first quarter of C$219 million or C$0.46 per share, down from C$236 million or C$0.51 per share in the prior-year quarter.

On average, five analysts polled by Thomson Reuters expected the company to report earnings of C$0.53 per share for the quarter. Analysts' estimates typically exclude special items.

The latest quarter's results include higher amortization and an equity loss of a joint venture, partially offset by lower income taxes. The company recorded an equity loss of C$13 million in respect of its interest in shomi, a new subscription video-on-demand service launched in the early November.

However, consolidated revenue for the quarter increased 2 percent to C$1.39 billion from C$1.36 billion in the same quarter last year. Analysts had a consensus revenue estimate of C$1.43 billion for the quarter.

Revenues for the consumer division declined 2 percent from last year to C$927 million. The company noted that the impact of prior year price adjustments and growth in Internet were offset by higher promotional costs, mainly due to the change in acquisition promotions from 3 to 6 months, lower video subscribers and lower On Demand revenues.

Business network services revenues rose 7 percent to C$127 million, primarily due to customer growth in both the small/medium and large enterprise markets.

Business infrastructure services revenues for the quarter were C$55 million.

Media revenues for the quarter declined 6 percent to C$307 million, primarily driven by lower airtime revenues due to general market softness and the sale of French-language channels Historia and Series+, in addition to retroactive favorable adjustment in the comparable quarter related to distant signal retransmission royalties.

The company's total operating income before amortization for the quarter edged down from last year to C$606 million, while operating margin narrowed 100 basis points to 43.6 percent.

Funds flow from operations rose 3 percent from the year-ago period to C$392 million.

During the quarter, the company's video subscribers decreased by 15,591 from the year-ago period to 1.94 million. However, Internet customers grew 14,048 to 1.94 million, and digital phone lines increased 14,048 to 1.94 million.

Looking ahead to fiscal 2015, Shaw Communications expects growth in consolidated operating income before restructuring costs and amortization to range from 5 to 7 percent with the inclusion of ViaWest which is expected to contribute about $85 million. The company also expects free cash flow for the year to exceed C$650 million.

Shaw Communications said its board of directors has approved an 8 percent increase in its annual dividend rate to C$1.185 on its Class B non-voting participating shares and C$1.1825 on its Class A Participating Shares. The new rates are effective with the monthly dividend paid on March 30, 2015.

Further, Shaw Communications' board declared the quarterly dividend on its cumulative redeemable rate reset preferred shares, Series A for the three-month period ended March 31, 2015. The dividend of C$0.28125 per Series A share will be payable on March 31, 2015 to holders of record at the close of business on March 13, 2015.

SJR is trading at $24.83, down $1.25 or 4.79 percent on a volume of 239,549 shares.

On the Toronto Stock Exchange, SJR.B.TO is trading at C$29.77, down C$1.43 or 4.58 percent on a volume of 165,683 shares.