MONTREAL - Transcontinental Inc. (TSX:TCL.A) reports it had $36.8 million of adjusted earnings in its fiscal second quarter, an increase of 12.9 per cent from a year earlier and ahead of analyst estimates.
The country's largest commercial printer had 47 cents per share of adjusted profit, up from 42 cents a year, and four cents per share above estimates compiled by Thomson Reuters.
The Montreal-based company — which produces newspapers, magazines and books in addition to its main business of printing and distribution — saw revenue hit by soft advertising sales. Revenue dropped 3.8 per cent from a year earlier to $498.2 million from $517.8 million.
"Despite the pressure we are experiencing in the advertising market, the increase in our profitability demonstrates the effectiveness of our strategy, namely strengthening existing assets and developing new revenue sources," Transcontinental president and CEO Francois Olivier said in a statement on Thursday.
Under standard accounting, Transcontinental had $34.7 million of net earnings or 45 cents per share for the three months ended April 30, up from $25.3 million or 32 cents per share in the second quarter of 2013.
The Montreal-based company said this week that its acquisition of 74 weekly newspapers from Sun Media, part of Quebecor Inc. (TSX:QBR.B), has been completed. Transcontinental agreed last week to put 34 newspapers up for sale for about two months to win approval from the federal Competition Bureau.
It has also completed the acquisition of Capri Packaging on May 3, which moves Transcontinental into a new industry segment that the company believes will provide growth opportunities. The acquisition will add about US$72 million to Transcontinental's revenues, with about 75 per cent of that coming from the seller, Schreiber Foods Inc..
During the quarter ended April 30, Transcontinental announced it would receive a $31 million payment after agreeing to adjust a printing contract with Montreal La Presse, Canada's largest French-language newspaper. The contract, originally signed in 2003, still expires in 2018 but Transcontinental had agreed to price reductions on future services and changes that allow the paper's owner to reduce the amount of material printed.
La Presse is owned by Gesca Ltd., which is part of the Power group of companies and a part-owner of The Canadian Press.
Transcontinental also announced on May 5 that it will begin printing the Montreal Gazette starting in August under an outsourcing agreement with Postmedia Network Canada Corp. (TSX:PNC.B), which also published the National Post and other major city newspapers in Ontario and Western Canada.