By: E&P Staff
For the fifth quarter in a row, Montreal-based Transcontinental, commercial printer and publisher of 12 dailies and almost 90 weeklies across Canada, improved its operating income, excluding unusual items, over the previous fiscal year. It reported increases in all financial indicators.
“I am very satisfied with the return to organic revenue growth for our second quarter in a row,” President and CEO François Olivier said in a statement. Expecting further improvement from higher operating income and decreased capital expenditures after big printing investments Olivier said Transcontinental “will thus be in an excellent position to make targeted strategic acquisitions in new media and digital technology,” as well as continue developing offerings to meet demand for “custom marketing programs tied in with one-to-one advertising and mobile technology.”
The company had a 1.85 ratio of net indebtedness (including the securitization program) to adjusted operating income before amortization as of July 31, compared with ratios of 2.08 as of April 30, 2010 and 2.59 as of October 31, 2009.
In the third quarter ended July 31, Transcontinental recorded consolidated revenues of $500.3 million, compared with $504.4 million in the same quarter of 2009. Excluding acquisitions, divestitures or closures of plants and publications, the paper effect and the exchange rate effect, revenues grew 3.2%.
Adjusted operating income before amortization grew 9.2%, from $82.6 million in 2009 to $90.2 million in 2010, and operating income margin rose from 16.4% to 18.0%. This dual increase was attributed primarily to rationalization measures in 2009, contributions of new printing contracts, and major retailers’ higher ad spending. The third quarter also showed 6.0% growth in adjusted operating income of $3.2 million, mainly due to last year’s rationalization measures and enhanced operational efficiency.
Net income applicable to participating shares rose 14.2%, from $25.3 million in 2009 to $28.9 million in 2010 ($0.31 to $1.35 per share), largely from higher operating income, and partly offset by increased income taxes, a higher net loss related to discontinued operations, and by dividends on preferred shares.
Adjusted net income applicable to participating shares was up 8.2%, from $31.8 million in 2009 to $34.4 million ($0.39 to $0.43 per share).
Consolidated revenues for the first nine months of fiscal 2010 amounted to $1.522 billion, compared with $1.600 billion in 2009, down 4.9%. Excluding acquisitions, divestitures and closures, the paper effect and exchange rates, the period saw 1.1% organic growth in revenues. Adjusted operating income before amortization rose 19.9%, from $218.8 million in 2009 to $262.3 million in 2010.
The company will implement a Canada-wide hybrid platform to print newspapers and retail flyers starting no later than early fiscal 2011. It expects the platform will generate new revenues and create “significant gains in synergies and efficiency.”