December 18, 2007 / 2:28 PM / in 10 years

Transcontinental earnings hit by C$, U.S. mortgages

TORONTO (Reuters) - Commercial printer Transcontinental Inc (TCLa.TO)TCLb.TO reported a lower fourth-quarter profit on Tuesday hurt by the appreciation of the Canadian dollar and the impact of the crisis in the U.S. mortgage market.

Transcontinental, which bills itself as the largest printer in Canada, earned C$38.6 million, or 46 Canadian cents a share in the quarter. That’s down from C$51.1 million, or 59 Canadian cents a share, in the same period a year earlier.

Revenue was C$618.3 million in the three months ended October 31, up from C$605 million in the same quarter of 2006.

Analysts expected the company to earn 54 Canadian cents before one-time items on revenue C$611.1 million, according to Reuters Estimates.

The company said the rise of the Canadian dollar in the quarter sliced 5 Canadian cents off its per-share earnings, while problems with U.S. mortgages and a related impact on financial services firms have hit direct marketing activities in that country.

During a conference call with analysts, Chief Executive Luc Desjardins said direct marketing remained an attractive medium for financial services firms in terms of customer retention and drawing new business.

He expected things to return to normal by spring.

“We cannot be sure about that,” he said. “That’s our best prediction as of today.”

Transcontinental has also been rumored to be among potential bidders for struggling Quebecor World Inc IQW.TO. Desjardins said his company was focused on targeting specific niches of the printing business and would only look at acquisitions that augment that plan.

“As far as we’re concerned, we’d like to grow,” he said. “We always look at evaluating all opportunities in North America, but only opportunities that enhance our niche strategy approach.”

In a statement, Desjardins said the company was confident of annual, adjusted earnings per share growth of an average of 10 percent, excluding the impact of foreign exchange. He expects average organic growth in revenue of 5 percent a year.

The company will pay a quarterly dividend of 7 Canadian cents a share January 25.

Transcontinental’s class A shares dipped 20 Canadian cents to C$17.25 on the Toronto Stock Exchange.

($1=$1.01 Canadian)

Editing by Bernadette Baum

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