Quebecor Reports 2Q: US Recession Resistant, Good Margins In Europe & Latin America
Press release from the issuing company
MONTREAL-July 26, 2001--Quebecor World Inc. is pleased to announce for the quarter ending June 30, 2001 Earnings per Share (on a diluted basis) of $0.41 compared with $0.40 a year ago.
Year to date, EPS increased 6% to $0.68 and net income increased 5% to $105.7 million.
"There is a tough economic environment in our core U.S. market but we are finding efficiencies and using alternative tools at our disposal to grow earnings for our shareholders,'' said Charles G. Cavell, President and CEO of Quebecor World Inc. "These numbers show Quebecor World can continue to build value for its shareholders even in difficult market conditions.''
In North America, even though revenues declined by 4%, operating margins matched record levels of 11.1%. The decline in revenues is the result of the economic slowdown in the U.S. but earlier announced cost containment initiatives and continuing synergies from the World Color merger significantly muted the impact.
"In addition, our diversified product offering and our geographic platform are helping us weather the storm,'' added Mr. Cavell. "While not recession proof, we are certainly proving to be recession resistant. Operating margins were maintained in the U.S. despite a difficult economy and margins significantly improved in Latin America and Europe.''
Europe reported positive results with revenues increasing 4% and operating income increasing 18%. This is before the unfavourable effects of currency translation.
In Latin America revenues increased 40% and operating income increased 100%.
Quebecor World's greenfield plant in Recife, the largest web offset facility in Brazil, was officially opened this quarter and it is producing telephone directories for Listel Listas Telefonicas S.A. and magazines for Editora Abril.
"We continue to see a strong future in Latin America,'' said Mr. Cavell. "Our strategy is to concentrate on certain key products and partner with the top customers in those product areas. This is what we have done successfully in North America and Europe and this is what we are doing in Latin America. As the leading printer in Latin America, with a population almost twice that of the U.S. we feel we are now ideally positioned to participate in this rapidly expanding market.''
Subsequent to the end of the second quarter the Company purchased Retail Printing Corporation of Taunton, Massachusetts. Retail Printing Corporation operates state-of-the-art printing plants in Taunton and Nashville, Tennessee. At the same time Quebecor World announced it was strengthening its west coast retail capacity by expanding its facility in Merced, California. These transactions enhance Quebecor World's position as the only printer providing rotogravure and offset printing services to retail and newspaper insert customers across the entire continent.
Management continues to believe that the Company's stock is significantly undervalued. As of June 30, 2001 the Company had repurchased 1,339,100 Subordinate Voting Shares under its April 6, 2001 Normal Course Issuer Bid. The average cost per share was CDN$38.58. The Company has also committed to repurchase for cancellation an additional 1,272,600 shares at an average price per share of CDN$39.07 for settlement prior to April 2002.
Quebecor World continues to be focused on paying down debt. During the quarter the Company cancelled the remaining balance of $250 million of the $1.25 billion Revolving Credit Agreement used for the World Color acquisition. The Company's debt-to-capitalization ratio improved to 47:53 from 53:47 a year earlier.
The Board of Directors declared a dividend of $0.12 per share on Multiple Voting Shares and Subordinate Voting Shares. The Board also declared a dividend of CDN$0.3125 per share on Series 2 Preferred Shares and CDN$0.4219 per share on Series 4 Preferred Shares. The dividends are payable September 1st, 2001 to shareholders of record on August 17, 2001.
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