Transcontinental Inc.: Increased Profitability in 3Q 2014

Transcontinental Inc.’s revenues increased 1.9% in the third quarter, from $490.7 million to $500.0 million, primarily due to the contribution from acquisitions, namely Capri Packaging and Sun Media Corporation’s weekly newspapers in Quebec, as well as new agreements in its two operating sectors. This increase was partially offset by the soft advertising market, which continues to influence both operating sectors.
 
Adjusted operating earnings rose 11.0%, from $52.5 million to $58.3 million. This performance is due to the contribution from acquisitions, new printing and distribution agreements, the company-wide optimization of its cost structure and its highly efficient printing platform. Net earnings applicable to participating shares rose from $30.1 million, or $0.39 per share, to $44.2 million, or $0.56 per share.
 
“I’m satisfied with our third quarter results, notably the 1.9% increase in consolidated revenues and the 12.6% increase in our profitability,” said François Olivier, president and CEO of TC Transcontinental.. “During the quarter we completed two acquisitions that add value to our business, strengthen our assets and diversify our operations. On the one hand, the integration of Capri Packaging is producing the expected results in a new area of operations, namely flexible plastic packaging. On the other hand, following the acquisition of the Sun Media Corporation weekly newspapers in Quebec and the beginning of their integration into our network, we expect the synergies from this transaction will be realized as planned.
 
“The printing operations continued to perform well and should pursue this path in the fourth quarter,” Olivier added. “The Media Sector, for its part, is staying on course to improve its profitability by integrating its recent acquisition and aligning its cost structure with the new reality of the market.”
 
For the first nine months of 2014, TC Transcontinental’s revenues decreased 2.4%, from $1,534.1 million to $1,497.5 million, primarily as a result of the soft advertising market in its two operating sectors, particularly in the printing of marketing products. The decrease was partially offset by the contribution from acquisitions and new printing and distribution agreements.
 
Adjusted operating earnings grew 6.7%, from $150.2 million to $160.3 million, attributable to the contribution from acquisitions, the positive effect of the Canadian dollar vis-à-vis the U.S. dollar, and cost-structure optimization. Net earnings applicable to participating shares rose from $71.1 million, or $0.91 per share, to $96.1 million, or $1.23 per share.