Transcontinental has published its results for the third quarter ended July 27, 2025. The downturn in its packaging division raises questions about the outlook for the North American packaging market. Several factors explain this situation, ranging from beverage consumption to the disposal of industrial activities.
Demand trends in food and beverage packaging
President and CEO Thomas Morin explained that the decline in volumes came mainly from the beverage sector. Cooler weather than the previous year weighed on consumption, reducing packaging requirements. This dependence on cyclical factors underlines the fragility of the food packaging market, which is closely linked to climatic variations and consumer habits.
The 6.3% decline in sales in the Packaging division, to $26.1 million, is also due to the sale of industrial packaging activities. This strategic decision alters Transcontinental's production perimeter and influences the comparison of results. For industry professionals, this type of repositioning calls into question the balance between specialization and diversification of product portfolios.
Cost-cutting programs maintain margins
Despite lower demand, operating margin rose from 15.6% to 16.7%. CFO Donald LeCavalier attributed this increase to effective cost-cutting measures. In the graphics and packaging industry, controlling costs - energy, raw materials, logistics - is an essential lever for offsetting fluctuations in volumes. However, these adjustments will come up against their limits if the contraction in demand takes a lasting hold.
For all its activities, Transcontinental posted net earnings of $38.7 million, down 11.2% on the same period in 2024. Adjusted earnings per share reached $0.70, slightly ahead of analysts' forecasts of $0.69. Total revenues fell by 2.2% to $684.4 million. This contrast between declining volumes and relatively stable financial performance highlights the solidity of cash flow, but also the caution of investors.
Outlook for the fourth quarter and beyond
Transcontinental's management anticipates a gradual recovery from the fourth quarter of 2025, driven by the return of orders in the protein and dairy sectors. However, the development of packaging markets remains subject to a number of uncertainties: adaptation to new environmental regulations, changes in raw material prices and household consumption choices. For packaging printers and converters, this outlook raises the question of how to manage industrial flexibility and anticipate demand cycles.
