Showing signs that it is holding up in Jamaica's deepening recession, The Gleaner Company Limited has reported after-tax profit of $27 million for the three months to June, reversing its first-quarter loss of $14.6 million.

The second-quarter return was on the back of revenue of just under $965 million, which was $76 million, or seven per cent below that for the corresponding period in 2008.

The group's media interests accounted for 87 per cent of first-half turnover and returned pre-tax operating profit of around $74 million. But more significantly, in a quarter when the Jamaican economy declined by close to four per cent and most media companies saw their reflection in lower advertising sales, The Gleaner Company's second-quarter revenue was 4.5 per cent higher than the $922.5 million in the first quarter.

Despite the uptick in the June quarter, the performance was not sufficient to fully reverse the stresses of much of the previous nine months, when the economy started to head decidedly south and The Gleaner aggressively began to position itself to face the recession, including a $368 million impairment loss in FY2008.

Cost containment

The upshot was that six-month revenue, at $1.9 billion, was four per cent lower than the turnover for the January to June period last year, when net profit was $79.7 million. That profit, however, was buoyed by net impact of non-trading profits of $85 million resulting from sales in Lascelles de Mercado shares and employee-benefit assets, offset by impairment charges.

Important to The Gleaner, in this period of recession was its clear success in containing costs.

The company's administrative expense in the second quarter, at $148 million, was 32 per cent lower than in the first quarter and 23 per cent less than the corresponding three months in 2008. However, for the six months to June, these administrative costs were two per cent higher than in last year's first half, suggestive of a time lag between the implementation of belt-tightening measures and when they started to show returns.

Distribution area

Another significant area of cost containment was distribution, for which the company outlaid $174 million in the second quarter. This expenditure was approximately seven per cent below the first quarter and three per cent below the corresponding quarter in 2008.

"Second-quarter performance has been creditable. The company's management and staff have responded well by tightening up on costs in this current environment of revenue uncertainty," said Christopher Barnes, deputy managing director.

"Going forward, if revenue projections hold, with aggressive focus on product offering and continued cost reduction, and little likelihood of further impairment charges, the company's performance should continue to improve."