Valassis Q2 Profit Plummets 50% On High Costs Of ADVO Buy

By: E&P Staff Valassis Communications Inc., the big newspaper insert distributor, reported Tuesday that its second-quarter profit fell 50% on high costs of its March purchase of direct mail giant ADVO Inc.

Second-quarter net earnings fell to $9.8 million, or 20 cents per share, from $19.7 million, or 41 cents per share in the same quarter a year ago.

Valassis said its second-quarter revenue jumped 134.9% to $612.1 million because of the ADVO acquisition. Its said revenue from free-standing inserts (FSI), its core business, fell 15.6% to $98.7 million. FSI segment profits plummeted 74% to 5.4 million. Valassis attributed the revenue drop to an approximately 10% reduction in FSI pricing, and a 4.6% drop in industry volume, as well as what it called "a slight decrease" in market share.


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