Transcontinental Q2 adjusted profit up 12.9%, beats estimates; ad revenue falls

MONTREAL – Transcontinental Inc. (TSX:TCL.A) reports it had $36.8 million of adjusted earnings in its fiscal second quarter, an increase of 12.9 per cent from a year earlier and ahead of analyst estimates.

Its adjusted profit per share was 47 cents, up from 42 cents a year, and four cents per share above estimates compiled by Thomson Reuters.

The Montreal-based printing and publishing company says its revenue was down 3.8 per cent from a year earlier, dropping to $498.2 million from $517.8 million, mainly because of soft advertising sales.

Under standard accounting, Transcontinental had $34.7 million of net earnings or 45 cents per share for the three months ended April 30, up from $25.3 million or 32 cents per share in the second quarter of 2013.

The Montreal-based printing and publishing company has said it completed a previously announced acquisition of 74 weekly newspapers from Sun Media, part of Quebecor Inc. (TSX:QBR.B).

Transcontinental agreed last week to put 34newspapers up for sale for about two months to win approval from the federal Competition Bureau.

During the fiscal second quarter, Transcontinental announced it would receive a $31 million payment after agreeing to adjust a printing contract with Montreal La Presse, Canada’s largest French-language newspaper. The contract, originally signed in 2003, still expires in 2018 but Transcontinental had agreed to price reductions on future services and changes that allow the paper’s owner to reduce the amount of material printed.

La Presse is owned by Gesca Ltd., which is part of the Power group of companies and a part-owner of The Canadian Press.

Transcontinental also announced on May 5 that it will begin printing the Montreal Gazette starting in August under an outsourcing agreement with Postmedia Network Canada Corp. (TSX:PNC.B), which also published the National Post and other major city newspapers in Ontario and Western Canada.