[MONTREAL, QC] — Transcontinental Inc. (TSX:TCL.A) will cut about 500 jobs as it integrates its recent acquisition of Quad/Graphics' Canadian printing operations, saying the cuts will better position the company in a tough market.
Two of the six Quad/Graphics plants — one in Dartmouth, N.S., and one in suburban Montreal — will close in the coming months, Montreal-based Transcontinental said Tuesday.
Transcontinental said that in the coming months some 500 of the 6,900 employees currently working at 33 printing plants will be affected by the integration of the Quad/Graphics acquisition.
"We have difficult choices to make, but are convinced that this is the best strategy for strengthening Transcontinental's base and protecting jobs in order to remain strong in a Canadian industry that is experiencing tough competition," chief executive Francois Olivier said in a statement.
The media company and publisher said the acquisition of the Canadian assets of Quad/Graphics is expected to bring in $230 million in new business and generate at least $40 million in net earnings before interest, taxes, depreciation and amortization over the next 12 to 24 months.
Transcontinental recently acquired all of Quad/Graphics' Canadian operations outside Vancouver, in exchange for its profitable Mexican operations and export-oriented black and white book publishing business.
The Quad/Graphics' Canadian plants, which once belonged to Quebecor World, include six printing plants as well as a premedia facility employing 1,500 people. Three of the plants are located in Ontario, two in Quebec, one in Alberta and one in Nova Scotia.
"Naturally, many scenarios were examined by the integration committee in order to keep as many employees as possible, but given the low utilization rate of the equipment in the newly acquired network, strategic decisions had to be made," Transcontinental said of the decision to close two of the plants.
The company is the largest printer in Canada and fourth-largest in North America. It is the leading publisher of consumer magazines and French-language educational resources and community newspapers in Quebec and the Atlantic provinces.
Transcontinental recently reported a first-quarter loss of $33.3 million, or 41 cents per share, including a $58-million hit tied to a tax reassessment for fiscal years 2006 to 2010. The company has said it will contest the reassessment.
The results compared with a profit of $25.7 million, or 32 cents per share, a year earlier.
Adjusted net income for the period ended Jan. 31 was down six per cent to $27.1 million, or 33 cents per share, a penny lower than analyst expectations, according to a poll by Thomson Reuters.
Revenue fell four per cent to $495.9 million from $514.8 million, driven by the sale of its black and white book printing business.
Shares in Transcontinental were down 2.3 per cent, or 30 cents, to close at $12.82 in trading on the Toronto Stock Exchange.