Quebecor World Announces Q3 Results: Net Income Down at $31 Million
Press release from the issuing company
MONTREAL--Nov. 1, 2005-- Quebecor World announces that for the third quarter 2005 the Company reported net income of $31 million from continuing operations compared to $46 million in the third quarter of last year. The continuing operations do not include a previously identified group of non-core group assets slated for sale and the third quarter results for 2004 have been restated to reflect this fact. On the same basis, diluted earnings per share in the third quarter were $0.16 compared to $0.28 in 2004. Operating income before IAROC was $97 million compared to $112 million during the same period last year. Consolidated revenues for the quarter were $1.58 billion compared to $1.57 billion last year.
In the third quarter 2005, the Company recorded impairment of assets, restructuring and other charges of $17 million or $0.12 per share compared to $13 million or $0.08 per share in the third quarter last year. Before impairment of assets restructuring and other charges, earnings per share for continuing operation were $0.28 compared to $0.36 in the third quarter of 2004.
"These results are indicative of lower prices for many print products, higher energy costs and the poor performance of our operations in France and the United Kingdom," said Pierre Karl Peladeau, President and CEO, Quebecor World Inc. "We are continuing to renew existing customers, and are winning new ones. These sales successes are positioning us to realize the maximum benefits of our new equipment as we move forward with the implementation of our North American and European retooling plans."
Quebecor World is on schedule with its current equipment investment plan that will see the installation of 22 new wide-web offset presses. Five of those presses will be in operation in U.S. facilities in the fourth quarter. The remainder will come into service in 2006 and 2007.
"Not only are our new presses being installed on time but because of the strong support form our suppliers and the diligent efforts of our employees, these presses have not experienced the usual start-up delays," said Mr. Peladeau. "To date, the new equipment is performing as advertised and we expect this to continue as we move forward with our investment plan."
To address the underperformance of certain sectors of its European operations and to further strengthen the overall platform the Company expects to announce a comprehensive European investment plan in the first quarter of 2006.
"Our European investment plan will be based on the criteria we established for our North America platform. We will invest in state-of-the-art technology and locate it where it can best serve our customers" added Mr. Peladeau.
As part of its effort to improve results in Europe, restructuring initiatives in the third quarter included workforce reductions at the Helio Corbeil facility in France and other plants across the Company. The cash cost of the third quarter restructuring initiatives was $9.5 million.
Quebecor World continues to reduce costs across its global platform. In the third quarter 2005, selling, general and administrative expenses were $95 million compared to $108 million in the third quarter of 2004, a decrease of 12% or $15 million excluding the unfavourable impact of currency translation.
For the first nine months of 2005, net income from continuing operations was $56 million or $0.20 per share compared to $94 million or $0.50 per share last year. Before impairment of assets, restructuring and other charges, diluted earnings per share for the first three quarters of 2005 were $0.77 compared to $0.86 last year. Operating income before IAROC was $270 million in 2005 compared to $310 million last year. Consolidated revenue for the first nine months of 2005 was $4.62 billion compared to $4.52 billion in 2004.
Impairment of assets, restructuring and other charges for nine months stands at $82 million compared to $67 million for 2004. On the cost side, for the first nine months of 2005, SG&A expenses were $294 million compared to $318 million in the first three quarters last year. Excluding the unfavourable impact of currency translation, SG&A expenses were lower by $32 million year-to-date. The savings are due to ongoing cost-containment initiatives and workforce reductions.
Quebecor World's core printing activities involve the printing of magazines, catalogs, retail inserts, books, directories and direct mail for the world's largest publishers and retailers. As the Company has grown by acquisition certain facilities were included in those transactions that do not relate to these core businesses. Approximately a dozen facilities in North America are involved in the printing of short-run contractual work such as marketing materials, annual reports, travel and fashion brochures. These activities are different from Quebecor World's core businesses and do not benefit from the advantages and synergies of the Company's global platform. The Company has announced its intention to sell this non-core group. Consequently the operating results related to these activities have been presented separately in the Company's consolidated financial results as discontinued operations and comparative figures have been restated to conform to the presentation adopted during the quarter ended September 30, 2005.
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 December 1, 2005 to shareholders of record at the close of business November 16, 2005.
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