Transcontinental generates organic revenue and profit growth in 2011
Monday, December 12, 2011
Press release from the issuing company
In 2011, Transcontinental Inc. increased its revenues by 1%, from $2,028.3 million to $2,043.6 million, driven primarily by the Printing sector as a result of numerous new contracts, most notably from the expanded relationship with The Globe and Mail, and to a lesser extent by increased volume in our distribution and community newspaper publishing activities. This growth was mitigated by lower volume from the printing of magazines, books and catalogues and marketing products as well as educational book publishing activities. Excluding acquisitions, divestitures and closures, the impact of the exchange rate and the paper component variance, organic revenue growth was slightly positive and was generated in all three operating sectors.
For this same period, adjusted operating income increased 1%, from $249.9 million to $252.7 million, driven primarily by the Printing sector through the contribution of new contracts coupled with the synergies associated with the use of our most productive assets and continued efficiency improvement initiatives. This growth was partially offset by continued strategic investments in the Media and Interactive sectors. Excluding acquisitions, divestitures and closures and the impact of the exchange rate, we generated close to 5% of organic profit growth.
"I am very proud of our 2011 results as we managed to grow both our revenues and profit in an industry that is undergoing a profound transformation. This past year alone we aligned our business portfolio with our strategy by making strategic acquisitions, divesting non-core businesses and consolidating our operations. We also signed new contracts and launched new products and services to develop both our traditional and new digital offering. In fact, we have now built a business of close to $200 million in digital and interactive solutions. In addition, we laid the groundwork to accelerate our development by adapting our go-to-market strategy, through the integration of our Media and Interactive sectors, by launching a new brand and positioning and by improving our financial position significantly. Given all this, we are very well positioned to be a Canadian leader in marketing activation, helping our customers attract, reach and retain their target consumers," said François Olivier, President and Chief Executive Officer.
Net income applicable to participating shares
Net income applicable to participating shares decreased 53%, from $166.6 million, or $2.06 per share, to $77.8 million, or $0.96 per share. This decrease is mainly attributable to two non-cash and non-operational items. The first item is an impairment of goodwill and intangible assets of $52.2 million in 2011 as compared to only $12.5 million in 2010. Of the total amount in 2011, $31.0 million was related to a goodwill impairment primarily linked to one-to-one marketing activities in the Interactive sector and $21.2 million was related to intangible assets, mainly in the Media sector, linked to trade names of our newspaper publishing assets in the Atlantic provinces and Saskatchewan. The second item is a significant negative variance related to discontinued operations due to the double effect of a net gain of $29.4 million in 2010, on the disposal of our direct mail operations in the U.S., compared with a net loss of $21.2 million in 2011, on the disposal of our Mexican operations, mainly linked to an accumulated foreign exchange loss. The net difference of $50.6 million is non-cash and non-operational. Excluding unusual items and discontinued operations, adjusted net income applicable to participating shares increased 4%, from $155.9 million, or $1.93 per share, to $161.7 million, or $2.00 per share.
Transcontinental’s revenues decreased 3%, from $556.4 million to $537.5 million. This decrease was primarily due to the non-recurring revenue from the printing contract for the Canadian Census last year. Adjusted operating income decreased 3%, from $88.9 million to $86.3 million. This decrease was primarily due to the non-recurrence of the Census contract as well as continued strategic investments in the Media and Interactive sectors. Net income applicable to participating shares decreased 82%, from $44.5 million, or $0.55 per share, to $8.0 million, or $0.10 per share. This decrease is mainly due to an impairment of goodwill and intangible assets of $52.2 million, as explained above, which is non-cash and non-operational. Excluding unusual items and discontinued operations, adjusted net income applicable to participating shares decreased 4%, from $62.7 million, or $0.78 per share, to $60.2 million, or $0.74 per share.
Other Financial Highlights
For more detailed financial information, please see Management’s Discussion and Analysis for the fiscal year ended October 31, 2011 and the complete financial statements on our website at www.tc.tc, under “Investors.”
Operating Highlights for Fiscal 2011
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