At quick glance, shared mail continued to bring in the biggest chunk of Valassis Communications Inc.’s first quarter 2009 profits. This business segment generated $18.8 million in operating income on segment revenue of $310.9 million. Both figures were down from operating income of $30.9 million and revenue of $356.3 million
Look more closely, though, and the numbers get confusing. Shared mail income was only 6% of this segment’s revenue, down from 8.7% during first-quarter 2008. In contrast, the company’s Neighborhood Targeted operations generated only $112.6 million during the quarter. But its operating income was $10.6 million – or 9.4% of operating revenue. In first-quarter 2008, Neighborhood Targeted operations pulled in $100.2 million, with operating income of $11.1 million, or just about 11.1% of revenue.
What happened? Within Shared Mail, Valassis reported volume declines (total shared mail pieces were 8.2 billion, down 4.6% from last year), shifts to lower-priced and lighter-weight inserts, and lower sell rates within its Red Plum wrap offering. There was a little good news: The average number of pieces per package was 8.1, up from 8 a year ago.
In contrast, Neighborhood Targeting operations benefited from increased advertising spending in the financial services, specialty retail and telecommunications verticals.
Free-standing insert revenue was $93.6 million, down from $98.6% in first-quarter 2008. Net income dropped from $1.5 million to $1 million between quarters, but in neither case was more than 1.5% of segment revenue.
International, Digital Media and Services revenue stood at $34.1 million, down from $42 million a year ago. The drop, according to Valassis, was due to the sale of its direct mail and French services businesses, and the discontinuance of several European businesses during the second half of 2008. This segment reported a $4 million profit, compared with a $1.8 million loss a year ago.
Across the entire company, Valassis posted net income of $13 million for the first quarter, compared with $10.9 million in the prior year. Management attributed these results in part to tax gains and cost-cutting moves.
The Livonia, MI firm reported revenue of $551.2 million for the quarter ended March 31, a 7.7% decrease from $597.1 million last year.
