Transcontinental posted better than expected results in its fourth quarter on Tuesday as it capped a difficult year for advertising revenue.
The printing and publishing company swung to a $9-million profit from a $94.5-million loss a year earlier when it booked a large asset impairment charge.
This year’s results included a $45.5-million charge related to the reduced value of its book publishing group. A year earlier, it had $165.3 million in asset impairments.
The three months ended Oct. 31 also included a $22.3-million charge for restructuring and other costs related to the integration of printing assets from Quad/Graphics Canada and job cuts linked to its weekly newspapers. That compared with a $3.3-million restructuring charge in the same quarter last year.
Excluding one-time items, adjusted net earnings grew to $67.4 million compared with $55.9 million a year earlier.
Revenue rose 1.7% to $571.9 million, due to the acquisitions of Capri Packaging and the Quebec weekly newspapers owned by Quebecor‘s Sun Media Corp., along with new printing and distribution contracts. Without the acquisitions, revenue fell 3.8%.
Analysts had expected Transcontinental would earn 72 cents per share in adjusted profits on $583 million of revenues, according to Thomson Reuters.
Chief executive Francois Olivier said its efforts to develop new sales and cut costs more than offset the impact of a challenging advertising market.
New agreements to print newspapers and flyers should help boost results next year and attract other Canadian newspaper publishers as customers. But he warned revenue would continue to be hurt by decreased advertising spending.
The Montreal-based company, which is Canada’s largest commercial printer and a significant publisher, has been undergoing a number of changes in response to a changing environment — including the shift to digital communications.
Analyst Drew McReynolds of RBC Capital Markets said the fourth-quarter results were driven by stronger margins in both the printing and media segments, as a result of cost reduction initiatives.
He said the quarterly revenue shortfall mainly reflected weaker organic revenue growth due to print advertising challenges in the media segment.
The analyst said the sale of 15 magazines should allow it to focus on business opportunities in the local advertising market.
“Management’s outlook is largely unchanged, pointing to continued underlying revenue headwinds and a focus on maximizing profitability,” he wrote in a report.
For the full year, Transcontinental earned $105.1 million compared to a loss of $23.4 million in 2013.
Revenue decreased 1.3% to $2.07 billion, mainly due to lower advertising revenues particularly in newspapers and consumer magazines.
Adjusted profits grew more than 13% to $168.2 million or $2.16 per share, beating analyst forecasts of $2.04 per share.
