By Trevor Shackelford August 11, 2005 -- Quebecor World (NYSE: IQW) announced second quarter results today. Revenue was up approximately 1% from last year to $1.49 billion. Net income fell 87% to $2.0 million, or breakeven on a per share basis, from $15.5 million a year ago. Results included approximately $8 million in charges associated with the discontinued commercial print division. The company continues to struggle with pricing pressures and increasing raw material costs. Topics of this summary: Quarter Highlights Segment Performance Guidance Raine Radar Q & A Quarter Highlights New presses are being installed across the North American production platform to reduce variable costs Quebecor has secured an exclusive contract to print all Yellow Book directories in the U.S. The company is realigning and investing in its European platform in an effort to turn the segment around The book business was aided by the release of the most recent Harry Potter novel Segment Performance North America Revenue during the second quarter was $1.15 billion, up slightly from last year. Operating income, before asset impairment and restructuring charges, was $84.9 million, down from $92.7 million last year. The company cited pricing pressures in magazine and direct as well as an unfavorable product mix for the decline. Magazine volume was off 3%. Total volume was flat. Canadian sales were down 3% excluding the favorable impact of currency. Europe Revenue for the segment was $284 million, down 8.4% from last year. Excluding the effect of foreign exchange, sales were down 12%. Volumes fell 13%. Continued price erosion and negative operating margins in France were some of the issues blamed for the poor performance in Europe. Latin America Revenue for the segment was $66 million, up 49% from the Q2 2004. Volumes were up 17%, centered in Book and Directory markets. Much of the increase in the book market came from the new Harry Potter book. The segment is finding success as an alternative to China for low cost production. Currency translation and increased paper sales also contributed to the increase. Operating margins and income were both up for the quarter. Guidance The company provided no specific guidance on the Q3 2005. Raine Radar It was a rough quarter for Quebecor, mostly pains associated with the process of selling its commercial print division. If it wasn’t for Harry Potter, the company would have likely lost a good deal of money. The Latin American division was a strong point for the company this quarter, and will probably continue as a new base for the company. France, on the other hand continues to drag the entire European platform down. The company thinks that this comes from years of not investing in the French facilities, and is therefore formulating a plan to revitalize the business. This move to reinvest is mirrored in North America as well, as new presses are slated to be installed over the next year and a half. Reinvesting seems to have replaced the acquisition plans the company had six months ago. Q & A Headcount was reduced by 800 during the first half with the majority leaving early in the second quarter. Quebecor is currently printing about 1/3 of Yellow Book’s volume, and will move to 100% in 2007. Scrap paper had little effect on Q2 results. The company currently is planning on investing in France to turn the business around rather than divest. The value of the Yellow Book contract excludes paper sales, since paper is customer provided. Pricing continues to be a major issue across the company. The company hopes the newer equipment will help recover costs.