Cogeco's 50% hike in Q3 profit amps up outlook

Tue, 07/11/2006 - 7:16am

Copyright 2006 Toronto Star Newspaper, Ltd.
All Rights Reserved
The Hamilton Spectator (Ontario, Canada)
July 11, 2006 Tuesday
Final Edition
By Donald Mckenzie, The Canadian Press
From Lexis Nexis

Cogeco Cable Inc. is boosting its full-year outlook after posting a 50 percent hike in third-quarter profit, with net income rising to $12.4 million or 31 cents a share.

The company's revenue in the three months ended May 31 jumped to $154 million from $140.1 million a year earlier.

Analysts surveyed by Thomson Financial were on average forecasting earnings of 28 cents a share on revenue of $153 million for Cogeco, which is Canada's fourth-largest cable TV company.

"We are very satisfied with the third-quarter results which continue to be in line with the results previously announced for the first and second quarters," chief executive Louis Audet told a conference call. "We are revising our guidance for fiscal 2006. Net income is now projected to be higher at $45 million."

Capital expenditures should rise to between $163 million and $168 million from the earlier projection of $160 million, Audet added.

The company said it expects revenue from Canadian operations to improve by between 10 and 12 percent in the next financial year, with an operating profit margin of about 40 percent.

For 2007, net income should rise to $53 million from $45 million, according to Audet.
Cogeco Cable added about 48,000 subscribers during the quarter, up from 6,400 additions in the year-earlier quarter.

That growth, along with operational improvements, prompted the cable operation to raise its full-year expectations to $600 million in revenue, with $245 million in operating income before amortization.

At parent company Cogeco Inc., whose other holdings include radio stations and the TQS
French-language television network, net income rose 11.4 percent to $5.5 million or 33 cents a share, while revenue grew 9.4 percent to $189.7 million.

Cogeco Cable is in the process of taking over Cabovisao, the second-largest cable TV operator in Portugal, for $665 million.

Some analysts criticized the deal as risky for Cogeco Cable, but Audet said it should close in four or five weeks.

"The price will not change," he said. "Is there a chance it might not close? We don't see any reason why it would not."

Cogeco operates in Ontario, where it is the No. 2 player after Rogers Cable, and in Quebec, where it's No. 2 to Videotron.


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