Larger Loss for R.R. Donnelley

Even the biggest of companies can’t avoid the impact of global recession. R.R. Donnelley, the largest printer in North America, reported a fourth-quarter net loss from continuing operations of $686.9 million on net sales of $2.8 billion, compared to a net loss from continuing operations of $292.9 million on net sales of $3.1 billion in the fourth quarter of 2007.

For the full year, the company reported a net loss from continuing operations of $191.7 million compared to a net loss from continuing operations of $48.4 million in 2007. R.R. Donnelley recorded an income tax benefit of $273.4 million in the fourth quarter of 2008, primarily reflecting deductions related to the decline in value and reorganization of certain entities within the International segment.

The company reports its financial results in two segments: U.S. Print and Related Services and International. Net sales for the U.S. Print and Related Services segment in the quarter decreased 4.9%, to $2.2 billion. Net sales for the International segment in the fourth quarter sank 22.1%, to $637.8 million.

R.R. Donnelley president/CEO Thomas J. Quinlan III said in a release: “Volatility in the global economy has resulted in significant declines in demand across nearly all of the diverse industries that we serve. Though our industry has been adversely impacted, we generated over $1 billion in cash from operations in 2008.”

Donnelley will continue to focus on two primary elements of its strategy, Quinlan said. “These are to achieve operational excellence in serving our customers and to maintain a very strong liquidity position by maximizing cash flow and deploying it prudently.”

According to the release, “As a consequence of the unpredictable global environment and its potential impacts on competitors and customers, the company will not provide full-year earnings per share guidance for 2009 on its conference call today.”

Dan Walsh, vice president of catalog/publication papers at distributor Bradner Smith & Co., says Donnelley is “experiencing the lack of print business like all the other printers. The first half of last year was still way up on paper pricing, so their input costs were higher, on ink as well.”

How bad is it for printers? “I had a cataloger/publisher client tell me yesterday that his print quote costs were down by almost 20%,” Walsh notes. “That’s great for him, but tells you how desperate the printers are.”

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