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Quebecor World Announces Q4 Results: Revenue Increased to $6.6B

Wednesday, February 16, 2005

Press release from the issuing company

MONTREAL--Feb. 15, 2005-- Quebecor World Inc. announced that for the fourth quarter 2004 the Company recorded net income of $45 million or $0.26 per diluted share, after impairment of assets, restructuring and other charges. This compares to net loss of $54 million or ($0.48) per share in the fourth quarter of 2003. Before impairment of assets, restructuring and other charges net income in the fourth quarter was $91 million or $0.60 per share compared to a loss of $38 million or ($0.36) per share in the fourth quarter last year. Operating income, before impairment of assets, restructuring and other charges increased 89% to $163 million in the fourth quarter, compared to $86 million in the fourth quarter of 2003. Operating margin on the same basis increased to 8.6% compared to 5.0% in the previous year. Consolidated revenues for the quarter increased 9% to $1.9 billion compared to $1.7 billion in the same quarter last year. Excluding the favourable impact of currency translation and an additional week in 2004, revenues increased 1% compared to the fourth quarter of 2003. For the full-year 2004, revenue increased to a record $6.6 billion compared to $6.4 billion in 2003. For the full-year 2004, after impairment of assets restructuring and other charges, Quebecor World reported net income of $144 million or $0.80 per diluted share. This compares to a net loss of $31 million or ($0.50) per share for the full-year 2003. Operating income before impairment of assets, restructuring and other charges increased 53% to $483 million compared to $316 million in 2003 and on the same basis, operating margin was 7.3% compared to 4.9% last year. Before impairment of assets, restructuring and other charges net income in 2004 was $239 million or $1.51 per diluted share compared to $40 million or $0.03 per diluted share last year. "We enjoyed a very strong fourth quarter as witnessed by our increased revenue, operating income and margins. I am particularly pleased that we have shown organic growth in sales in the quarter. This is a further confirmation of our ability to attract and retain customers by providing them with the best platform and services in the industry," said Pierre Karl Peladeau, President and CEO, Quebecor World Inc. "Our fourth quarter and full-year financial results demonstrate that we have made the right choices to improve and grow our business for our shareholders, customers and employees. As we go forward we will continue to focus on cost containment while investing in new technologies to improve performance and enhance our service offering." In the fourth quarter Quebecor World continued to implement its restructuring initiatives to reduce costs and improve productivity. As a result of these initiatives the Company incurred $53 million for impairment of assets, restructuring and other charges in the quarter. The cash portion of this charge, $14 million is principally related to work-force reductions across the global platform. In the fourth quarter the Company further reduced its workforce through the consolidation and downsizing of several small facilities. The $39 million non-cash portion of the charge includes the write-down of certain idle and non-performing assets across the global platform. In 2005, the Company expects to record $17.8 million in restructuring charges related to the 2004 initiatives. In 2004, the Company incurred $122 million in impairment of assets, restructuring and other charges resulting in the elimination of 2,518 employee positions, 2,228 were eliminated as of December 31, 2004 and 290 will be eliminated as part of these initiatives during 2005. The restructuring initiatives involved the movement and relocation of selected pieces of equipment and will create 567 new positions spread across several facilities for a net workforce reduction of 1,951. The workforce reductions have taken place in all regions in which the Company operates. The Company took specific charges of $9 million in the fourth quarter of 2004 compared to $23 million in the fourth quarter last year. The specific charges in the fourth quarter 2004 were related to lease provisions and other costs primarily pertaining to work-force reductions and plant closures in North America. In the fourth quarter, excluding specific charges and the effect of currency translation, SG&A decreased by $16 million or 12%. This is essentially due to the savings from workforce reductions. On the same basis, for the full-year 2004, SG&A was lower by $58 million or 11% compared to the previous year. In 2004, the Company generated $319 million of free cash flow compared to $183 in 2003. The Company also lowered its debt-to-capitalization as of December 31, 2004 to 43:57 compared to 44:56 as of December 31, 2003. North America In North America before impairment of assets, restructuring and other charges operating income increased to $138 million and operating margin was 9.5% in the fourth quarter compared to $71 million and 5.2% in the same quarter last year. On the same basis, operating margin for the full-year increased to 8.5% compared to 6.0% in 2003. The increases in operating income and margin are due to higher volumes in several business groups and the positive impact of restructuring and cost containment initiatives across the North American platform. Revenues increased 8% to $1.46 billion compared to $1.35 billion in the 4th quarter of 2003. In 2004 revenue increased 1% to $5.13 billion compared to $5.06 billion in 2003. Excluding the effect of currency translation, revenue increased 6% in the quarter and was essentially flat for the full-year. In the fourth quarter revenue was up compared to the same period last year in all business segments except for commercial/direct. The revenue increase is due to increased volume from new and existing customers which helped offset the continuing competitive price environment in almost all North American business groups. Europe In Europe, revenues increased by 11% in the fourth quarter to $376 million and 13% for the full-year to $1.30 billion. Excluding the favourable impact of currency translation revenue increased 2% for the fourth quarter and the full-year. Volume increases of 3% in the quarter and 4% in 2004 helped offset a continuing competitive price environment across our European platform. In the fourth quarter, before impairment of assets, restructuring and other charges, the Company's French operations recorded a positive operating margin albeit lower than the same period last year. On the same basis, for the full-year 2004 operating margin in France was negative but improved over 2003. In the fourth quarter, before impairment of assets, restructuring and other charges operating income in Europe was $17 million compared to $18 million in the fourth quarter of 2003 and operating margin was 4.4% compared to 5.3% in the same quarter last year. These results were achieved despite temporary inefficiencies created by the phase out of a facility in Stockholm, Sweden and the transfer of equipment to two other facilities. On the same basis operating income in 2004 doubled to $50 million from $24 million in 2003 and operating margin rose to 3.9% compared to 2.1% last year. Latin America In Latin America revenue and volumes increased in the quarter and for the full-year. Revenue in the fourth quarter increased 17% to $56 million compared to $48 million in the fourth quarter of 2003. On a full-year basis revenue increased 9% to $192 million compared to $177 million in 2003. Before impairment of assets, restructuring and other charges operating income was negative in the quarter but positive for the year compared to a loss in 2003. Management Discussion and Analysis Please refer to the MD&A for the reconciliation to Canadian generally accepted accounting principles of certain figures used to explain these results. The MD&A can be found on the Company's website at www.quebecorworld.com and through the SEDAR and SEC filings. The Board of Directors declared a dividend of $0.14 per share on Multiple Voting Shares and Subordinate Voting Shares. The Board also declared a dividend of CDN$0.3845 per share on Series 3 Preferred Shares, CDN$0.421875 per share on Series 4 Preferred Shares and CDN$0.43125 on Series 5 Preferred Shares. The dividends are payable on March 1st, 2005 to shareholders of record at the close of business February 24, 2005. Financial statements are available on the Company's website and through the SEDAR and SEC filings.

 

 

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