(AP) Knight Ridder Inc., one of the nation’s largest newspaper publishers, said Tuesday that third-quarter earnings from continuing operations will decline by about 20% due to damages related to Hurricane Katrina and higher newsprint costs.
Last year, the company reported third-quarter earnings per share from continuing operations of 93 cents, compared with total earnings per share of 99 cents. Knight Ridder said the quarter will suffer because of the cost of newsprint per ton, which rose 9.1 percent during the quarter, depreciation of the company’s new plant in Kansas City, higher interest expenses, and losses incurred in Biloxi, Miss., as a result of Hurricane Katrina.
The 20 percent drop excludes last year’s 11-cent benefit from the resolution of prior-year tax issues. Analysts surveyed by Thomson Financial are looking for operating profit of 89 cents per share on revenue of $737.1 million.
Chairman and CEO Tony Ridder said, “We believe that in the fourth quarter costs will be more in line with what they were in the first half of the year. Results will benefit by inclusion of earnings from the three newly acquired newspapers and by our continued aggressive share repurchases. On a continuing operations basis, excluding the favorable resolution of prior-year’s tax issues, but including our newly acquired newspapers, earnings per share in the fourth quarter will show growth.”
Total August advertising revenue, which no longer includes results from the recently sold Detroit Free Press and the Tallahassee Democrat, rose 1.2 percent to $174.5 million, as classified ad revenue increased 4.5% to $71.7 million. Retail ad revenue fell 1.7% to $76.1 million and national ad revenue grew 1.3% to $26.7 million. Total operating revenue for the month increased 0.4 percent to $220.9 million.
“The month was disappointing. Although recruitment and real estate (advertising) have remained strong all year, we did not see the hoped-for turnaround in auto in August (I think we will see some turnaround in September),” Ridder said. National advertising “growth, held back by ongoing softness in travel and entertainment, is still modest. And retail (ads), which had been running up 2.6 percent for the year through July, declined.”
For the year to date, ad revenue increased 2.4 percent to $1.53 billion, as classified ad revenue grew 4.1 percent to $606.3 million. Retail ad revenue rose 2 percent to $681.4 million and national ad revenue fell 0.6 percent to $245.8 million. Total operating revenue for the year to date increased 1.4 percent to $1.94 billion.
Knight Ridder shares closed Monday at $64.90 on the New York Stock Exchange, but fell $2.10, or 3.2 percent, to $62.80 in premarket activity Tuesday.