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Quebecor World Continuing Operations Profit Falls in Q1

Press release from the issuing company

Montreal, Canada – Quebecor World Inc. announces that for the first quarter 2006 the Company reported a net income of $6.3 million from continuing operations compared to $15.8 million in the first quarter of last year. Losses per share from continuing operations in the first quarter were $0.04 compared to diluted earnings per share of $0.05 in 2005. Diluted earnings per share from continuing operations before impairment of assets, restructuring and other charges were $0.09 compared to $0.27 in the first quarter of 2005. Operating income before IAROC in the first quarter was $50 million compared to $89 million during the same period last year. Consolidated revenues for the quarter were $1.5 billion compared to $1.6 billion in the first quarter of 2005. Quebecor World’s first quarter results continue to reflect a challenging market environment highlighted by negative price pressures, changing product mix for many print services and higher energy costs compared to the same period in 2005. The Company is focussed on completing its investment program that involves installing new wide-web presses in its North American and European platforms. Once installed this new technology will deliver greater page throughput at lower costs creating a more efficient manufacturing platform. Several of the new presses were installed in the fourth quarter of 2005 and their performance is steadily improving. However overall, first quarter results were offset by the second and most significant phase of the retooling plan that began in the first quarter and will continue throughout much of 2006. “As we indicated in our year-end results, 2006 will be a transition year for Quebecor World. This year we are experiencing the full impact of previously announced contract expirations in some of our businesses while new contract wins will only enter our platform in the later part of this year and in 2007,“ said Pierre Karl Péladeau, President and CEO, Quebecor World Inc. “Along with the installation of our new equipment we are continuing to improve the productivity of our global platform through restructuring. This plan will strategically position our assets where they can most effectively serve the needs of our customers as they develop print programs to meet the challenges of today’s marketplace.” Volumes in North America were essentially flat compared to the first quarter last year. Volumes increased in the catalog and book segments, they were flat in retail and lower in magazine, direct, directory and in Canada. Margins in the U.S. were also adversely impacted by unfavourable price/mix in several segments. In Europe volume was also down compared to the first quarter of 2005 due to the full impact of the loss of a customer in the UK and the sale of five French facilities. In the first quarter, impairment of assets, restructuring and other charges were $22 million compared to $33 million in the first quarter of 2006. The first quarter restructuring initiatives will result in the reduction of 756 employee positions. These initiatives include previously announced workforce reductions at the Brookfield, WI facility and reductions at other facilities across the Company’s global platform. Second quarter and third quarter restructuring initiatives will include workforce reductions as a result of the closure of our book facility in Kingsport, TN and our facility in Strasbourg, FR. These and other ongoing initiatives will enable the Company to operate more efficiently by reducing costs and by reassigning selected assets to larger more specialized facilities. Quebecor World recorded free cash flow in the first quarter of $5 million. This is an improvement of $85 million over last year due in part to $27 million from the previously announced sale of certain assets. Financing Activities In January, Quebecor World concluded an agreement with Société Générale for the Canadian dollar equivalent of € 136 million long term committed credit facility relating to the Company’s purchase of MAN Roland presses as part of its previously announced U.S. re-tooling program. At March 31st, $101 million was drawn on this facility at favourable cost to alternative financing. In March, Quebecor World successfully closed its private offering of $450 million aggregate principal amount of 8 3/4% Senior Notes due March 15, 2016, which were sold at par. The net proceeds from the sale of the Senior Notes were used to repay in full $250 million aggregate principal amount of 7.20% Senior Notes due March 28, 2006 of Quebecor World’s wholly-owned subsidiary, Quebecor World Capital Corporation and the balance is being used for general corporate purposes, including the reduction of other indebtedness. On April 18th the Company redeemed its cumulative redeemable 6.75% First Preferred Shares, Series 4 (the Series 4 Preferred Shares) at a price of CDN $200 million ($171 million). These actions reduce the Company’s after tax financing costs and ensure it has adequate liquidity and financial flexibility to pursue its strategies. Dividend The Board of Directors declared a dividend of $0.10 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 and CDN$0.43125 on Series 5 Preferred Shares. The dividends are payable on June 1st, 2006 to shareholders of record at the close of business May 23rd, 2006.

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