(Montreal) TC Transcontinental believes it is seeing the light at the end of the tunnel regarding the soaring price of its inputs in packaging activities.
The prices of resin, the main component of plastic packaging, have reportedly started to stabilize, François Olivier, president and CEO of the Montreal printer and packager, said at a conference to discuss most recent quarterly results held after the markets closed on Thursday.
“The majority of contracts take into account market prices with a delay of two to three months,” he explained. We have seen the prices of some resin categories decline and in other segments stabilize. In a month or two [les prix de Transcontinental devraient avoir rattrapé le marché], but every month will be better. We are approaching the finish line. ”
The resin market had experienced a strong surge in inflation over the past year. In September, Olivier said the price of resin had increased 14 times in just 12 months. “It’s increase, after increase, after increase,” he said.
In the fourth quarter (ended October 31), the lag between input prices and the company’s selling prices was among the factors behind the 0.9% drop in operating profit to $ 81.2 million. explained Donald LeCavalier, Chief Financial Officer. The decrease in the emergency wage subsidy and the change in the exchange rate also contributed to this decrease.
Regarding food inflation, Olivier believes that the trend confirms the relevance of his flyer printing offer. “The flyers from grocers will be more relevant than ever. ”
A new CEO
The results unveiling on Thursday marked Olivier’s last day as CEO after 28 years with the company, including 13 years as CEO.
His successor, Peter Brues, who will take office on Friday, was present during the call. A member of the board of directors since 2018, Mr. Brues said he would be part of the strategic continuity of his predecessor.
Asked about his priorities for his first months in office, the manager kept his cards in his deck. “My priority was meeting clients and colleagues. I still have a little work to do to strengthen my understanding of the business. I will be able to give you a better answer when the next results are unveiled. ”
Results exceeding expectations
In the fourth quarter, Transcontinental posted results that exceeded analysts’ expectations.
On an adjusted basis, Transcontinental posted profit of 70.6 million, or 81 cents per share, down from an adjusted profit of 72.4 million, or 84 cents per share, in the fourth quarter of 2020.
Revenue was $ 775.8 million, up 18.3% from $ 655.7 million.
Analysts on average expected an adjusted profit of 73 cents per share, from earnings of $ 705.4 million, according to forecasts collected by financial data firm Refinitiv.
The company reported net profit attributable to shareholders of 39.2 million, or 45 cents per share, for its quarter ended Oct. 31, down from that of 51.3 million, or 59 cents per share, of the same period last year.
Transcontinental’s results included a federal wage subsidy of $ 3.7 million in the most recent quarter, for a total of $ 29.5 million for the full year. By comparison, those amounts were $ 14.5 million and $ 58.5 million, respectively, last year.
The share of Transcontinental gained $ 0.62, or 3.21%, to $ 19.93 at the close of the Toronto Stock Exchange which took place before the conference call with the analysts, but after the release of the results by press release.