(Montreal) Printer and packager Transcontinental reveals results below investors’ expectations, while its revenues decline in its two main sectors of activity.
Difficult economic conditions for its customers in the retail sector are weighing down volumes in the packaging and flyer printing sector.
In the packaging sector, retailers continued to reduce the size of their inventories, after preemptively inflating their reserves amid supply chain disruption, explained President and CEO Thomas Morin , Thursday, during a conference with financial analysts.
The leader, however, believes that this period of adjustment is over. “I’m not saying that’s the case for the entire industry, but I believe our customers are where they want to be. »
In an uncertain economic context, Mr. Morin emphasizes that the packaging segment would be resilient to a possible recession. “More than 90 percent of what we do is package food,” he says.
The head of finance, Donald Le Cavalier, recognizes, for his part, that the period of high food inflation nevertheless brings a certain uncertainty. “Will people buy as many items if prices continue to rise? »
In the printing sector, management anticipates that the price increases it has adopted to take into account the increase in its costs should have an impact on demand and volumes.
The company is counting on cost reduction to reduce the pressure on its profitability.
Net profit declined 38.7% to 20.9 million in the third quarter ended July 30. Diluted adjusted earnings per share reached 51 cents. Revenues, for their part, were down 5.5% to 706.7 million in the third quarter ended July 30.
Before the results were released, analysts expected earnings per share of 52 cents and revenue of 755.8 million, according to financial data firm Refinitiv.
“We view the results negatively at the current share price,” said analyst Drew McReynolds of RBC Capital Markets.
The Montreal company is sailing against headwinds as it has changed its top boss twice in a period of 18 months. Mr. Morin took the reins of the company last June.
The packaging segment is considered by the company as an avenue for growth while the printing sector is in a situation of structural decline.
Transcontinental shares fell 77 cents, or 5.8 per cent, to $12.63 on the Toronto Stock Exchange on Thursday.