MONTREAL--Oct. 27, 2004-- Quebecor World announces that for the third quarter 2004 the Company reported net income of $59 million or $0.37 per share, before impairment of assets, restructuring and other charges. This compares to $55 million or $0.34 per share in the third quarter of last year. On the same basis, operating income was $115 million compared to $117 million during the same period last year. Consolidated revenues for the quarter were $1.63 billion compared to $1.60 billion last year and were essentially flat when adjusted for currency translation. Reported net income for the third quarter of 2004 was $48 million compared to a $60 million in 2003.
For the first nine months of 2004 net income was $148 million or $0.91 per share, before impairment of assets, restructuring and other charges. This compares to $78 million or $0.37 per share for the first nine months of 2003. Consolidated revenues for the first three quarters of 2004 were $4.7 billion compared to $4.6 billion during the same period last year. Year-to-date reported net income was $99 million compared to $23 million for the first nine months of 2003.
"We have made significant progress this year in improving our results in a challenging market environment," said Pierre Karl Peladeau, President and CEO, Quebecor World Inc. "In the third quarter we continued to demonstrate year over year improvement in many areas, albeit not in the same order of magnitude as our earlier results. This is largely attributed to our third quarter restructuring initiatives that included the closing and downsizing of certain facilities and the redeployment of equipment within the platform. This situation was not helped by negative pricing pressures. The installation of new presses, beginning in the third and fourth quarters of 2005, will help to counterbalance the pricing impact on our results."
In the third quarter, the Company recorded impairment of assets, restructuring and other charges of $12.9 million. The largest portion of this charge is associated with the Company's decision to close its printing facility in Stockholm, Sweden. The Company expects to incur an additional $10 million in restructuring in the fourth quarter and 2005 related to this closure. The remainder of the third quarter charge includes costs involving earlier decisions to reorganize Quebecor World's U.S. magazine and book platforms, and other workforce reductions across the Company. The third quarter initiatives affected 282 employees in total, however the Company estimates that 29 new jobs will be created in other facilities. As a result of these new initiatives 95 positions have been eliminated and 187 will be eliminated before December 31, 2004.
Quebecor World recorded specific charges of $6 million in the third quarter for various items including workers' compensation claims related to plant closures and downsizing in North America and provisions for leases.
In the third quarter 2004, selling, general and administrative expenses were $118 million compared to $119 million in the third quarter of 2003. Excluding the unfavourable impact of currency translation selling, general and administrative expenses were lower by $3 million compared to the same period last year. In the third quarter, increases in pension expense and higher healthcare costs partially offset the impact of cost reductions. On a year-to-date basis, excluding the positive effects of currency translation and specific charges, SG&A expenses were lower by $42 million compared to the first nine months of last year. Financial expenses for the third quarter were $32 million, a $10 million decrease compared to the same quarter in 2003. On a year-to-date basis financial expense was $102 million compared to $126 million for the first three quarters of 2003.
In North America operating income increased to $113 million in the third quarter 2004, before impairment of assets, restructuring and other charges, compared to $109 million last year. On the same basis, operating margin increased to 8.7% from 8.5%. Revenues increased to $1.29 billion compared to $1.28 billion in 2003. Magazine revenues in the quarter were essentially flat compared to 2003. Volumes were flat for the quarter and up 3% year-to-date. Year-to-date operating income and margins have improved compared to the same period in 2003 because of cost containment and headcount reductions. However in the third quarter magazine operations were adversely affected by the transfer of presses and certain work to other facilities related to the implementation of restructuring initiatives that resulted in reduced efficiencies. In catalogs, volume for the quarter was up 1% but revenues were down due to reduced prices, certain operational inefficiencies and overall product mix. In the retail group revenues and volume increased for the quarter and year-to-date partially offsetting a lower price environment. Operating income and margin improved compared to last year as a result of cost containment initiatives. In book and directory revenues were flat compared to the third quarter of 2003. In the book group volume was up in the third quarter as a result of strong demand in the adult trade and educational sectors. In directory, volume was up for the quarter and year to date which is explained by more volume from independent directory publishers replacing one major contract terminated in 2003. In the commercial/direct group revenues were down for the quarter and year-to-date due to intense competition in the sector. In Canada revenues and volume increased. Excluding the favourable impact of currency, revenues were flat in the quarter and down year-to-date compared to last year.
In Europe revenues in the third quarter increased 8% to $296 million compared to $273 million in the same period last year. Excluding the positive effect of currency translation revenues were down slightly for the quarter but up 3% year-to-date compared to the same period in 2003. European volume increased 2% in the third quarter and 5% year-to-date due to strong performance in the magazine and retail sectors. In France, operating margin was negative in the third quarter but improved over last year due to the benefits of restructuring. European operations outside France showed improvements in operating income and margin in the third quarter and year-to-date compared to last year.
In Latin America revenues in the third quarter were $45 million compared to $41 million during the same period last year. Year-to-date revenues increased 5% to $136 million compared to $129 million last year. Volume was up 25% in the quarter and 9% for the first nine months of 2004. Operating margins for the third quarter and year-to-date also increased compared to last year as the result of improved efficiencies and the benefits of cost containment.
The Board of Directors declared a dividend of $0.13 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 per share on Series 5 Preferred Shares. The dividends are payable on December 1, 2004 to shareholders of record at the close of business November 12, 2004.
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