RR Donnelley’s Net Earnings Cut in Half as Net Sales Slump

CHICAGO—Nov. 1, 2012—R.R. Donnelley & Sons reported third-quarter-2012 net earnings of $71.4 million on net sales of $2.5 billion, compared to net earnings of $158 million on net sales of $2.7 billion in the third quarter of 2011.

“While our top line continues to be pressured by challenging industry dynamics and ongoing global economic headwinds, we remained focused on managing our cost structure to drive improved operating earnings and margins in the third quarter,” said Thomas J. Quinlan III, RR Donnelley’s president and CEO. “As we close the year and look ahead to 2013, our focus on aggressively aligning the cost structure with revenue will remain intact.”

Business Review
Net sales in the quarter were $2.5 billion, down $174.5 million, or 6.5 percent, from the third quarter of 2011. Pro forma for acquisitions, net sales decreased 6.9 percent due to volume declines, a 118 basis point unfavorable impact of changes in foreign exchange rates, price erosion and a 46 basis point unfavorable impact of lower pass-through paper sales.

Operating earnings in the third quarter of 2012 were $186.7 million, which were impacted by restructuring and impairment charges and acquisition-related expenses totaling $15.2 million, compared to operating earnings in the third quarter of 2011 of $156.8 million, which included restructuring and impairment charges and acquisition-related expenses totaling $34.9 million.

Excluding restructuring and impairment charges and acquisition-related expenses, non-GAAP operating income increased from $191.7 million in the third quarter of 2011 to $201.9 million in the third quarter of 2012. Lower variable compensation expense, lower pension expense, lower depreciation and amortization and productivity improvements more than offset lower volume, an unfavorable product mix, continued pricing pressure and unfavorable pricing on by-products.

Segments
The company reports its results in two reportable segments: U.S. Print and Related Services and International.

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Comments
  • Michael Nuccio

    In all my experience, when a print shop encounters this much loss of money, management will lay workers off and then expect the workers who are left to do double the work. What happens then, is management might give all the workers a pay-cut and expect the ones who are left to work even harder than they were before. After doing this, then they will have quality issues, over-worked/under paid workers will make mistakes and lose more clients. Then the whole process will start over again.

    In my opinion, all upper management should be fired. They then should restructure the company, leaving good working people alone, and get rid of all the over-paid dead weight management teams. Just like an under achieving sports team, it’s time for new coaches before it gets worse!!!

  • Craig Faletti

    I worked for Moore Business Forms for 23 years. Moore continually pressured us to raise our sell prices. We were not compeptpive in the market place and lost many good sales people and customers. It was always the tail wagging the dog and the sales assiciates were always blamed for poor sales, not management. I’m not surrised with he sales results. We are still in a depressed economy and a depressed industry.

  • Hard Working People

    I agree with Michael Nuccio….
    There is a lot of dead weight and the managers should be the first to go not the hard working people. Especially the Regional Managers…..