Shares of Transcontinental Media (TSE:TCL.A) were trading 3.26 percent lower today after the company released its second quarter results on Thursday.
Revenues, driven by the acquisitions of Capri Packaging and weekly Sun Media Corporation - a subsidiary of Quebecor - rose 2.7% to C$490.5 million for the quarter that ended on April 30, below expectations of C$491 million.
Profits more than double to 81.2 million or $ 1.04 per share, while its adjusted profit increased by 13.7 to 39.1 million dollars, or 50 cents per share, which was lower than the analysts’ expectations of 54 cents per share.
Transcontinental also missed the target by unveiling an operating profit of C$87 million, up 10%, but below expectations of C$96 million.
The results to expectations ‘gap’ might be attributed to the acquisitions of Capri Packaging (label printing) and Sun Media. But, the president and CEO of Transcontinental, François Olivier, was undaunted, noting in a conference call with analysts that he was "satisfied with the results."
Olivier explained that sales had been negatively affected by retailer Target Canada’s closure and by the fact that the company lost control of many weekly publications since the same period last year. The consolidation of the Future Shop brand in Best Buy also affected distribution activities.
"There were 35 more newspapers (weeklies) distributed and that no longer exist today. From one year to the next, this is a considerable setback," said Olivier.
Olivier said that Transcontinental has not been able to do anything as part of the transaction with Sun Media as the Competition Bureau had not yet completed its analysis.
The Bureau did grant a conditional approval for the transaction, requiring Transcontinental to sell 34 out of its 154 weekly publications from its portfolio. Still, the incomes of printing operations were up 4.4% to C$365.2 million. In the media sector, they were C$138.1 million, down 1.6%.
As for the rest of the year, Olivier said he is pursuing acquisitions in the United States in the printing of flexible packaging for the food industry.
The company declared a dividend of 17 cents per share to be paid out on July 22 to shareholders of record as of July 6.