“The growth in our revenues and profitability in the first quarter confirms the success of our strategy,” said François Olivier, president and CEO of TC Transcontinental. “In our printing division, we continued to sign new agreements and adapt our printing platform to industry realities. In our packaging division, we successfully completed the integration of our most recent acquisition and we are satisfied with the results. As for the Media Sector, the acceleration of the transformation of the advertising market led to lower results for the newspapers in our Local Solutions Group. To better adapt to new market realities, we have taken important measures to give ourselves the agility needed to adjust our costs and our service offering.”
Olivier continued, “We will continue to optimize our operations in the printing division and grow our packaging division through acquisitions and sales development. We have a sound financial position and continue to generate significant cash flows that will enable us to pursue our transformation.”
Revenues for the first quarter of 2016 went from $489.7 million to $498.9 million. The increase is mainly attributable to the contribution from the acquisition of Ultra Flex Packaging and the appreciation of the U.S. dollar against the Canadian dollar.
In its Printing division, revenues remained relatively stable when excluding the effect of the loss of a U.S. customer and a Canadian retailer early in 2015. In addition, the timing of purchases from an important client had an impact on the Packaging division.
In the Media Sector, the decline in advertising revenues continues to have a significant impact on the results of the company’s publishing activities, mainly within newspapers in the Local Solutions Group.
Adjusted operating earnings went from $55.7 million to $57.1 million, an increase of 2.5%, in the first quarter of 2016. This performance is attributable to the net effect of an acquisition, disposals and closures and, to the favorable effect of the exchange rate, as well as to the favorable effect of a decrease in the stock-based compensation expense.
Transcontinental successfully completed its 100-day integration plan with respect to the acquisition of Ultra Flex Packaging and the evolution of its national sales force enables it to continue developing new business opportunities. Furthermore, the recent investments in order to promote and support its acquisition and sales development strategy will have an unfavorable impact on results for the remainder of fiscal 2016.