UPDATE 1-Transcontinental Inc's adjusted profit rises on acquisition
* First-quarter adj EPS C$0.37 vs C$0.33 year earlier
* Revenue rises 8 percent
* Says weak ad spending will continue to hurt media business
March 13 (Reuters) - Transcontinental Inc, Canada's largest commercial printer, reported a 5 percent rise in first-quarter adjusted profit as the acquisition of Quad/Graphics Canada helped reduce the impact of the loss of a contract with retailer Zellers.
Transcontinental, which has a contract to print the Globe and Mail newspaper in most of its major markets in Canada until 2028, said benefits from the Quad/Graphics acquisition would continue in the current and the next quarter.
The company said agreements to print flyers and marketing products worth about C$30 million on an annualized basis are expected to start at the end of this quarter.
Transcontinental lost the Zellers flyer printing and distribution contract due to the closure of the Zellers stores.
Zellers, a Canadian chain of mass merchandise discount stores and a unit of Canadian retailer Hudson's Bay Co, said last year that it would close all its stores by March 2013.
Weak advertising spending would continue to be a drag on the media business, the company said. Transcontinental's media unit publishes magazines, community newspapers and French-language educational resources.
The company also has contracts to print magazines and marketing products for Rogers Communications Inc, Canada's largest wireless company.
Net profit applicable to participating shares was C$17.8 million ($17.4 million), or 23 Canadian cents per share, for the first quarter ended Jan. 31, compared with a net loss of C$33.3 million, or 41 Canadian cents per share, a year earlier.
On an adjusted basis, net income rose to C$28.5 million, or 37 Canadian cents per share, from C$27.1 million, or 33 Canadian cents per share, a year earlier.
Revenue rose 8 percent to C$528.7 million.
The company said it would distribute a special dividend of C$1.00 per participating share in the current quarter.
Shares of Transcontinental, which has a market value of C$956 million, closed at C$12.46 on the Toronto Stock Exchange on Tuesday.
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