TC’s revenue increases in Q2, but not from media

Revenues within the company's media sector decreased by 58%, largely due to sales of its Atlantic Canada titles.
bank-phrom-352283-unsplash

Transcontinental posted a positive quarter in its Q2 results on June 8, with CEO Francois Olivier stating that the company was in an “excellent position to begin a new phase of [its] growth plan.”

However, most of its revenue increases came from printing and packaging, and not from its media portfolio.

Revenues for the quarter came to $534.7 million, up 7.2% year-over-year. Adjusted revenues, which exclude an amount of $62.3 million for the accelerated recognition of deferred revenues related to an agreement signed with Hearst in December, sat at $472.4 million (down 5.3% from $498.7 million). According to the company, this decrease was largely due to the sale of TC’s media assets in Atlantic Canada.

Operating earnings increased by 46%, rising to $99 million. Adjusted earnings, which exclude an amount of $46.6 million related to the Hearst deal and several other restructuring costs increased by $2 million to $65.7 million. Net earnings hit $68.9 million (up from $46.4 million), while adjusted net earnings increased 6.1%, up to $45.1 million.

The company sold its local and regional newspapers in Atlantic Canada and also put nearly 100 newspapers up for sale in Quebec. The sales of those papers has been ongoing, with 33 publications sold this quarter. The company’s publishing portfolio now focuses mainly on business and trade publications rather than consumer and community products.

Revenues within TC’s media sector decreased to $24.8 million, a 58% drop from Q2 2017. While much of the decrease was attributed to the sale of the company’s assets in Atlantic Canada, as well as other local and regional titles, it was also due to “organic decline in revenues from the local and regional newspaper publishing niche in Quebec and Ontario.”

The company release pointed out that revenues from the company’s business and education publishing niche remained relatively stable, with adjusted operated earnings resulting in a loss of $1.7 million (from a loss of $1.4 million in the same period last year).

Lower advertising volumes didn’t just affect TC’s own titles: lower advertising revenues for The Globe and Mail led it to cease printing production with TC in the Maritimes, whereas La Presse and the San Francisco Chronicle also ceased printing as of April 1. TC said this resulted in some decline in revenues across its printing vertical, which were partially offset by additional volume in the marketing products vertical.

TC has also moved further into the packaging business, acquiring Coveris Americas in May. The deal includes 21 production facilities located across Canada, the U.S., the U.K., Central America, New Zealand and China. The deal was valued at $1.7 billion Canadian and added 3,100 employees to TC.