Canadian media company and printer Transcontinental increased its dividend Wednesday after it beat expectations with an 18% increase in adjusted profit to $40.1 million.
The Montreal-based company earned 49 cents per share in adjusted profits for the period ended April 30. That compared to 42 cents a year earlier.
Analysts had expected 44 cents per share on $523 million of revenues, according to Thomson Reuters.
New printing contracts boosted Transcontinental’s revenues by just 1% to $514.7 million. Excluding factors such as acquisitions, closures and the currency exchange, organic revenues grew by three per cent.
Transcontinental increased its quarterly dividend by 23% to 13.5 cents per share. The dividend is payable on July 22 to shareholders of record on July 4.
“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 president and CEO Francois Olivier.
He said the company’s solid financial position provides it with the flexibility to pursue its transformation.
Olivier added that the dividend increase reflects Transcontinental’s “strong cash flow generating ability.”
Free cash flow from operations increased 16% to $76.1 million, while capital expenditures decreased to $8.4 million from $26.3 million.
Net income fell to $33 million or 41 cents per share, from $67 million or 83 cents a year earlier.
The decrease included unusual items such as restructuring costs and last year’s $34.7 million in net income from its discontinued U.S. direct mail business.
Transcontinental said it marked its 8th consecutive quarter of higher adjusted operating income thanks to new contracts and synergies from using its most productive printing assets.
That was partially offset by investments in the media and interactive sectors and intense competitive pressures in some niche services.
During the quarter, Transcontinental announced the closure of two printing plants – one in Quebec and one in Manitoba. Production will be transferred to larger, more efficient facilities.
It also acquired a weekly newspaper in Dolbeau-Mistassini, Que., and launched five community newspapers in the province.
In addition to signing a four-year deal with Canadian Tire that will add about $30 million to $40 million in annual revenues, it partnered with Undertone to expand its digital advertising offering.
Transcontinental is the largest printer in Canada and Mexico, the fourth-largest in North America and has 10,500 employees. It publishes consumer magazines and French-language educational resources, as well as community newspapers in Quebec and the Atlantic provinces.
