MONTREAL – Transcontinental Inc. (TSX:TCL.A) says new printing contracts and a move into flexible packaging have helped soften the blow from a decline in revenue from local and national advertisers.
The printing, publishing and packaging company’s net earnings dropped by two per cent to $43.3 million in the third quarter ended July 31 from the comparable period of 2014, when it benefited from a tax-related adjustment.
On an adjusted basis, Transcontinental’s profit improved by 30.5 per cent to $48.8 million as a result of improved adjusted operating earnings and a decrease in financial expenses.
Profit for the quarter ended July 31 amounted to 55 cents per share, or 62 cents on an adjusted basis.
Overall revenue was essentially flat, slipping 0.2 per cent to $481.9 million from $483.0 million in the 2014 third quarter.
The Montreal-based company — Canada’s largest commercial printer — continues to grapple with a long-term and widespread decline in print advertising, especially in its media sector and flyer printing operations.
Those declines have been partially offset by increased volume in its newer packaging division, new printing contracts signed last year and the appreciation of the U.S. dollar against Canada’s currency.
On Sept. 1, Transcontinental announced plans to double its relatively small packaging division’s revenue by purchasing a U.S. company for US$80 million in cash. The packaging division will have an estimated US$150 million of annual revenue after the acquisition of Brooklyn-based Ultra Flex, which has about US$72 million in annual revenue.
In last year’s third quarter, Transcontinental had $44.2 million or 56 cents per share of net income. Adjusted net income was $37.4 million or 48 cents per share.