Sales were essentially flat for Transcontinental’s second quarter (Feb. thru April) when compared with year prior, however when removing exchange rate fluctuations and other one-time factors the company’s organic revenue experienced a three percent boost.
Net income declined year-over-year in the quarter from $67 million to $33 million, the significant drop attributed to a one-time gain last year related to the withdrawal from its direct mail operations in the U.S. during this time period, so adjusting for unusual items the net income actually grew by 18% from $34.1 million in Q2-2010 to $40.1 million for Q2-2011.
“I am pleased with our second quarter results, especially with the fact that we have generated organic revenue and profit growth for the fifth consecutive quarter in an industry in profound transformation,” stated Francois Olivier (pictured), president and CEO, in a company release.
As the largest printing company in Canada, Transcontinental’s printing sector—which accounts for about 70% of the company’s sales—saw its revenues for the quarter grow by $7 million over the same period last year, reaching $361.3 million in 2011 from $354.3 million in 2010. For the six-month period the printing sector sales are up $22.7 million over last year (from $716.8 million to $739.5 million).
In its statement, the company notes that in the second half of fiscal 2011 the contract to print The Globe and Mail along with new printing contracts at its Fremont, California facility and expected gains in market share will generate additional revenues.
In addition, a new agreement with Canadian Tire is expected to generate an additional $30 to $40 million per year over four years across Transcontinental’s business beginning in January 2012, with the printing sector realizing some of those benefits.
The statement goes on to say that the printing sector will continue its equipment optimization initiatives in order to further reduce its operating costs, identifying some initiatives including the automation of a plant in its retail group and integrating flyer printing at its Vaughan plant in its newspaper group.