Valassis Q2 net earnings more than double year over yearValassis has reported that its net earnings for second quarter of 2009 have more than doubled compared with the same period in 2008, though total revenue dropped.
The company said that the 141% rise in net earnings, from $6.6 million last year to $15.9 million this year, could be attributed to a plan to maximize profits through cuts in selling, general and administrative (SG&A) costs including staffing, divested and discontinued businesses and reduced discretionary spending.
“Our original forecast for cost savings from our 2009 Profit Maximization Plan was $57.5 million, to be accomplished through a combination of cost of goods sold and SG&A reductions and the elimination of unprofitable businesses or product lines," said Alan Schultz, chairman, president and CEO or Valassis, in an e-mail to DMNews. "We now forecast cost savings of $20 million to $25 million over our original forecast of $57.5 million."
The company's total Q2 revenue was $544 million, a drop from nearly $595 million last year. Earnings per share of 33 cents represented an increase from 14 cents in the period last year.
Among the four Valassis business segments — shared mail; neighborhood-targeted products; free-standing inserts (FSIs); and international, digital media and services — only FSIs saw an increase in revenue when compared to Q2 last year. FSI revenue was $92.1 million, up 3.8% compared to the prior year quarter; profit for the segment was $4.3 million, compared to a loss of $2.4 million in the same period in 2008.
“We are obviously pleased with our results, and that our products are well aligned with what we believe is a permanent shift in consumer behavior toward value-oriented media," Schultz added. "Our experience tells us that marketing dollars follow the consumer.”
Valassis noted that the segment still faced challenges related to a lawsuit it recently won against competitor News America.