Transcontinental Inc. reported an increase in net earnings applicable to shareholders for the first quarter and increased its dividend despite a drop in revenue due to weakness in the advertising market.
The Montreal-based printer also announced it will acquire Capri Packaging, a Missouri-based supplier of printed flexible packaging, for US$133 million, in a deal it called an “important strategic move” into a new promising growth area.
Net earnings applicable to participating shares grew almost 10% to $17.2 million or 22 cents from $15.7 million or 20 cents in the period last year, boosted by “significantly lower” financial expenses but partially offset by higher income taxes compared to the first quarter of 2013.
Adjusted net earnings applicable to participating shares remained stable at $26.4 million, or 34 cents per share, as did adjusted operating earnings, at $43.5 million. The company attributed those results in part to changes to the company’s cost structure and the positive impact of the loonie versus the U.S. dollar.
Revenues fell to $499.3 million from $525.6 million, due primarily to the soft advertising market. It impacted both of the company’s operating sectors, putting a drag on the volume of marketing products and magazine operations in the printing sector and impacting magazines and interactive marketing products in the media sector.
“Despite the soft market conditions in which we operate, we were able to maintain our profitability due to the many cost saving initiatives company-wide,” said Transcontinental chief executive Francois Olivier.
“In the months ahead, we will continue to adjust our cost-optimization strategy to ensure the corporation is aligned with the current market reality, and will continue to strengthen our existing assets and develop new products and services.”
Transcontinental said the Capri acquisition will give the company an attractive asset that will allow it to leverage its core manufacturing competencies, and focus on a production process that is similar to its current printing process.
“It also marks the start of a long-term partnership with Schreiber Foods Inc., and of our activities in a new niche,” Olivier said.
