Quebecor World Q3 Net Income Falls: Weak Ad Spending, Overcapacity
Press release from the issuing company
MONTREAL--Oct. 23, 2003-- Quebecor World Inc. announced that for the third quarter 2003, the Company reported net income of $60 million or $0.38 per share. This compares to net income of $99 million or $0.64 per share in the third quarter of last year. Operating income was $125 million in the quarter compared to $168 million during the same period in 2002. Revenues for the quarter were $1.59 billion compared to $1.62 billion during the same period last year.
"We are clearly operating in a challenging economic environment and our results reflect this," said Jean Neveu, President and CEO, Quebecor World. "Weak advertising spending and over capacity are continuing to have a negative impact on pricing in all our geographies which has affected overall margins. However, we believe our strategy of reducing costs, improving efficiencies and securing volume will pay off."
During the quarter Quebecor World continued to implement its rigorous cost containment program. As part of these initiatives the Company has reduced its workforce by 1,174 employee positions in the first nine months of 2003. In the third quarter, selling, general and administrative expenses decreased by $13.9 million compared to the same period last year. $8.1 million of the decrease was due to restructuring initiatives implemented this year including reduction in force and the consolidation of corporate functions as well as the relocation of certain sales offices into plants. For the first nine months of 2003 SG&A expenses were reduced by $22.6 million, excluding specific charges for bad debt and the impact of currency translation. Going forward Quebecor World will continue to review its global platform to find opportunities to permanently lower its cost base and improve efficiencies.
Quebecor World is focussed on maintaining and increasing volume in all its product segments and in the third quarter announced contract renewals, extensions and new business from leading publishers including, Williams Sonoma, Bauer, United Stationers, Dex Media East and QwestDex.
In North America revenue for the quarter was $1.28 billion compared to $1.32 billion in the third quarter of 2002. Price erosion caused by overcapacity in the North American print industry resulted in a reduced operating margin of 8.4% compared to 11.9% during the same period last year. Some segments such as retail and logistics, experienced increases in volume but this was offset by volume reductions in the book/directory group and in magazine/catalog offset. Despite important contract wins during the quarter, these results reflect the difficult magazine advertising market, as well as book publishers' desire to reduce inventories.
In Europe revenues increased in the third quarter to $268 million compared to $248 million last year primarily due to the positive impact of currency translation. The European print market is also suffering from price pressure due to excess capacity resulting in reduced margins in most countries with the exception of the United Kingdom.
In Latin America revenues for the quarter were $40 million compared to $45 million in the third quarter of 2002. Operating income and margins were affected by price erosion and overcapacity. This was particularly evident in Peru and Brazil. The Company is seeing improving results at its operations in Mexico, Colombia and Argentina.
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 $0.13 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$0.4219 per share on Series 4 Preferred Shares and CDN$0.43125 on Series 5 Preferred Shares. The dividends are payable on December 1st, 2003 to shareholders of record at the close of business November 14, 2003.
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