Canadian media company and printer Transcontinental Inc. increased its dividend Wednesday after it beat expectations with an 18-per-cent increase in adjusted profit to $40.1-million.
The Montreal-based company earned 49 cents a share in adjusted profit for the period ended April 30. That compared with 42 cents a year earlier.
Analysts had expected 44 cents a share on $523-million of revenue, according to Thomson Reuters.
New printing contracts boosted Transcontinental's revenue by just 1 per cent to $514.7-million. Excluding factors such as acquisitions, plant closings and the currency exchange, organic revenue grew by 3 per cent.
Transcontinental increased its quarterly dividend by 23 per cent to 13.5 cents a share. The dividend is payable on July 22 to shareholders of record on July 4.
"I am pleased with our second-quarter results, especially with the fact that we have generated organic revenue and profit growth for the fifth consecutive quarter in an industry in profound transformation," stated president and chief executive officer François Olivier.
He said the company's solid financial position provides it with the flexibility to pursue its transformation.
Mr. Olivier added that the dividend increase reflects Transcontinental's "strong cash-flow-generating ability."
Free cash flow from operations increased 16 per cent to $76.1-million, while capital expenditures decreased to $8.4-million from $26.3-million.
Profit fell to $33-million or 41 cents a share, from $67-million or 83 cents a year earlier.
The decrease included unusual items such as restructuring costs and last year's $34.7-million in profit from its discontinued U.S. direct mail business.
Transcontinental said it marked its eighth-consecutive quarter of higher adjusted operating profit, thanks to new contracts and synergies from using its most productive printing assets.
That was partly offset by investments in the media and interactive sectors and intense competitive pressures in some niche services.
During the quarter, Transcontinental announced the closing of two printing plants - one in Quebec and one in Manitoba. Production will be transferred to larger, more efficient facilities.
It also acquired a weekly newspaper in Dolbeau-Mistassini, Que., and launched five community newspapers in the province.
In addition to signing a four-year deal with Canadian Tire that will add about $30-million to $40-million in annual revenue, it partnered with Undertone to expand its digital advertising offering.
Transcontinental is the largest printer in Canada and Mexico and the fourth-largest in North America and has 10,500 employees. It publishes consumer magazines and French-language educational resources, as well as community newspapers in Quebec and the Atlantic provinces.