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Cogeco profit dips on acquisition costs

Cogeco president and CEO Louis Audet answer questions during a news conference prior to the cable company's annual meeting Wednesday, December 16, 2009 in Montreal.

Paul Chiasson/The Canadian Press

Cogeco Inc. saw a slight dip in third-quarter profit despite a big jump in revenue.

Montreal-based Cogeco posted net profit in the third quarter of $18.9-million, or $1.12 per diluted share, compared with $19.3-million or $1.15 per share in the year-earlier period.

Revenue in the quarter was up 41 per cent to $504.4-million from $358-million.

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The company cited costs related to recent acquisitions at main subsidiary Cogeco Cable Inc.

Cogeco Cable purchased U.S. cable company, Atlantic Broadband, last summer for $1.36-billion (U.S.).

It later bought Canadian Internet infrastructure provider Peer 1 Network Enterprises for $526-million (Canadian).

For the third quarter, Cogeco Cable posted a net profit of $53.1-million -- or $1.08 per share – compared with $53.2-million or $1.09 per share in the year-earlier period.

The $1.08-per-share result beat analysts' consensus estimate of $1.03.

Earnings in the third quarter of 2013 that were boosted by the inclusion of the two acquisitions were also partly offset by the acquisition costs, additional depreciation and amortization and financial expense, including about $3.5-million in refinancing of some long-term debt, Cogeco Cable said.

Third-quarter revenue at Cogeco Cable was up 45.3 per cent to $464.5-million.

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Cogeco Cable's Canadian operations lost 7,363 basic cable subscribers in the quarter, higher than the forecast of 5,500 net losses by Desjardins Securities analyst Maher Yaghi.

On the U.S. side, the company posted a net loss of 1,044 cable subscribers, compared with Mr. Yaghi's estimate of 1,000.

"We are satisfied with the favourable results obtained for the third quarter of fiscal 2013," Cogeco Inc. president and chief executive officer Louis Audet said in a news release late Wednesday.

"The cable subsidiary continues along a path of steady growth and profitability, as per expectations. In the last three months, we successfully refinanced over half of Cogeco Cable's indebtedness in order to take advantage of historically low interest rates."

Cogeco Cable raised its quarterly dividend to 26 cents per share from 25 cents in the third quarter.

Third-quarter cash flow at the subsidiary reached $43.1-million, up 68.4 per cent from $25.6-million.

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In preliminary guidance for fiscal 2014, the company said it expects revenue for the year of $1.935-billion; Mr. Yaghi's estimate is $1.914-billion and consensus is $1.922-billion.

Earnings before interest, taxes, depreciation and amortization (EBITDA) is forecast by the company to be $885-million, compared with Mr. Yaghi's $873-million and consensus of $864-million.

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More

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