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

Net sales for the U.S. Print and Related Services segment decreased 6.4 percent from the third quarter of 2011 to $1.9 billion in the third quarter of 2012. Pro forma for acquisitions, net sales in the segment decreased 6.9 percent due to volume declines across most product offerings, lower pass-through paper sales of $18.6 million, or 93 basis points, and continued pricing pressure across the segment.

The segment’s operating income of $178.7 million in the third quarter of 2012, which was negatively impacted by charges for restructuring and impairment of $9.4 million, increased $9.4 million from operating income of $169.3 million in the third quarter of 2011, which included charges for restructuring and impairment of $28.1 million.

The segment’s non-GAAP operating income of $188.1 million in the third quarter of 2012 declined by $9.3 million from the third quarter of 2011, though the segment’s non-GAAP operating margin of 10.1 percent in the third quarter of 2012 improved by 10 basis points from the third quarter of 2011, as productivity improvements, lower variable compensation expense and lower depreciation and amortization were partially offset by volume declines, an unfavorable product mix, unfavorable pricing on by-products and pricing pressure.

Net sales for the International segment of $655.4 million decreased 6.9 percent from the third quarter of 2011, inclusive of a 453 basis point unfavorable impact from changes in foreign exchange rates. The balance of the change in net sales was driven by timing shifts in Latin America, volume declines in Europe and pricing pressure across the segment, partially offset by volume increases in Asia, Global Turnkey Solutions and Business Process Outsourcing and higher pass-through paper sales.

The segment’s operating income of $27.5 million in the third quarter of 2012, which was negatively impacted by charges for restructuring of $4.4 million, decreased by $9.2 million from operating income of $36.7 million in the third quarter of 2011, which included charges for restructuring of $4.6 million.

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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…..