TC Transcontinental is launching a plastic recycling group to handle materials within its packaging operations and plastics recovered from other commercial, industrial and agricultural sources.

The Montreal-based printer and packaging company says it will purchase equipment to convert flexible plastics into recycled plastic granules and will be on the lookout for potential acquisitions.

Chief executive Francois Olivier says the decision stems from the company’s desire and that of many customers to differentiate themselves by offering products containing recycled plastic.

The recycling group will be part of the packaging operations that have been growing as the company seeks to diversify from its main printing and media businesses, which have both been affected by a shift away from paper-based publications and advertising.

Transcontinental raised its dividend but missed analyst expectations Thursday as it reported first-quarter net income of $6.4 million or seven cents per share, down from $28.1 million or 32 cents per share a year earlier.

The company said it will now pay a quarterly dividend of 22.5 cents per share, up from 22 cents and doubled the size of its share buyback plan for the year to up to two million shares.

Revenue for the three months ended Jan. 26 fell 6.1 per cent to $705.8 million from $751.6 million.

Excluding one-time items, its adjusted profit for the quarter was $42.8 million or 49 cents per share, compared with $45.5 million or 52 cents per share in the first quarter a year earlier.

The company was expected to post 54 cents per share in adjusted profits on $717 million of revenues, according to the financial markets data firm Refinitiv.