Donnelley Wins IAG Contract - Analyst Blog
March 13 2013 - 7:20AM
Zacks
Printing major R. R.
Donnelley & Sons Co. (RRD) recently
announced that it has secured a multi-year contract from
International Airlines Group (“IAG”), the parent body of British
Airways, Iberia and Avios. However, the details of the transaction
were not disclosed. Per the contract, Donnelley will mainly provide
print management, direct response, warehousing, and logistics
services.
Over the past 12 months, important
contract wins have ensured significant growth for Donnelley.
Donnelley won a number of multi-year multi-million dollar contracts
from the likes of Guidepost, Parke-Bell Ltd. and Office
Depot (ODP). Donnelley also won a
multi-year contract from Canada-based Scotiabank, which expands the
company’s presence in North America.
We believe that the new contract
wins bode well for Donnelley, as they reflect its superior
technology and growing reputation. Other than the multi-year
contracts, Donnelley’s growth has also been driven by accretive
acquisitions. In 2012, Donnelley acquired Presort Solutions, Meisel
Photographic, Express Postal Options International and Edgar
Online.
Currently, Donnelley is facing
significant threat from digital technologies that enable much
easier transfer, designing, resetting and reproduction of data.
This affects big projects, such as books and journals, where the
number of printed pages are much higher.
Additionally, with publishers
coming out with digital versions of books and sophisticated e-book
readers from Amazon.com Inc.
(AMZN) and Barnes & Noble
Inc. (BKS) for reading these books
becoming increasingly available, the interest in commercially
printed paperbacks and hard covers is waning.
Donnelley needs to expand its scope
beyond this traditional business and acquisitions are likely to
take it in that direction. We believe that Donnelley will achieve
growth in fiscal 2013 due to its innovative product pipeline.
Donnelley plans to introduce near field communication (“NFC”) tags
during the year, which will boost top-line growth going
forward.
Moreover, an improving
macro-economic condition in the domestic market and cost cutting
initiatives will boost profitability in the near term. Donnelley’s
improving liquidity position is also a positive catalyst in our
view.
Currently, Donnelley has a Zacks
Rank #2 (Buy).
AMAZON.COM INC (AMZN): Free Stock Analysis Report
BARNES & NOBLE (BKS): Free Stock Analysis Report
OFFICE DEPOT (ODP): Free Stock Analysis Report
DONNELLEY (RR) (RRD): Free Stock Analysis Report
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