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Revenue drops at Transcontinental in Q1 2024 due to lower print volumes

At Transcontinental, revenues decreased by $26.6 million, or 3.8 per cent, from $707 million in the first quarter of 2023 to $680.4 million in the corresponding period of 2024. This decrease was due to lower volume in the printing sector and, to a lesser extent, in the packaging sector, according to a company statement.

“We had a solid first quarter despite persistently challenging market conditions,” said Thomas Morin, president and CEO of TC Transcontinental. “This performance is largely attributable to cost reductions in line with our priorities and the profitability and financial position improvement program announced in December.

However, operating earnings before depreciation and amortization increased by $6.8 million, or nine per cent, from $75.9 million in the first quarter of 2023 to $82.7 million in the first quarter of 2024. Adjusted operating earnings before depreciation and amortization increased by $12 million, or 14.3 per cent, from $84.1 million in the first quarter of 2023 to $96.1 million in the first quarter of 2024. These increases were mainly due to cost reduction initiatives, partially offset by lower volume.

“The Packaging Sector had an excellent start with a 29.6 per cent growth in adjusted operating earnings before depreciation and amortization for the quarter compared to last year, as the initiatives implemented to reduce our costs and a more favourable product mix more than offset the softer demand across the market. While there are still uncertainties surrounding short-term demand, we are satisfied with the progress made with the deployment of new equipment related to our strategic investments and the market interest in that respect.

“In our printing sector, our cost reduction initiatives allowed us to mitigate the persistent challenges facing our book printing activities. We are encouraged by the opportunities in our retail related services, in particular the continued roll-out of Raddar [flyer] as well as our in-store marketing activities.

“I’m pleased that our two-year program aimed at improving our earnings per share and our financial position has already started to show results. By the end of the second quarter, we will have reduced our overall workforce by six per cent. We also achieved significant cost of goods sold savings, and our solid earnings and free cash flows enabled us to reduce our indebtedness ratio to 2.00x at the end of the first quarter.”

“Our financial position is solid, and we expect to generate significant cash flows by the end of fiscal 2024 that will enable us to pursue our debt reduction objective,” said Donald LeCavalier, executive vice-president and CFO of TC Transcontinental.

The company believes sustainable packaging solutions position should be a key driver of long-term growth. In the printing sector, the company expects lower volume in their traditional activities. They expect to offset this decrease by cost reduction initiatives and the continued roll-out of the Raddar flyer.