Quebecor Reports Q1: CEO says "we can and must do better"
Press release from the issuing company
MONTREAL--May 5, 2004-- Quebecor World Inc. announced that for the first quarter 2004 the Company reported net income of $36 million or $0.20 per share. This compares to net income of $24 million or $0.12 per share in the first quarter of 2003. Operating income was $94 million compared to $74 million in the first quarter of 2003. Before restructuring and other charges operating income increased to $98 million, net income was $39 million and earning per share was $0.23. Consolidated revenues for the quarter were $1.55 billion compared to $1.54 billion for the same quarter last year. Excluding the favourable impact of currency, revenues decreased by 4%.
"Our first quarter performance demonstrates that the actions we began last year to reduce our cost base are producing improved results for our shareholders. Still we can and must do better," said Pierre Karl Peladeau, President and CEO of Quebecor World Inc. "Despite these improved results we continue to face a challenging market environment that has resulted in overcapacity and negative price pressures. As a result, we remain dedicated to further reducing costs and improving efficiencies across our global platform."
In the first quarter Quebecor World incurred $4.3 million of restructuring and other charges that are primarily related to a workforce reduction of 368 employee positions. The workforce reductions are taking place across the world-wide platform but the bulk of the activity is concentrated in the Company's North American operations. Under this initiative, 331 positions have been eliminated and the remainder will be completed by the end of the second quarter. This restructuring is in addition to 2,200 plus employee positions that were eliminated as part of the 2003 restructuring.
Excluding the unfavourable impact of currency translation, selling, general and administrative expenses were $113 million in the first quarter or $23 million lower than the same period last year. The savings are explained by Quebecor World's commitment to cost containment and improving efficiency.
Compared to the same period last year, financial expenses were reduced by $4 million to $38 million. During the quarter, the Company incurred a $2 million charge related to the completion of the redemption of its 7.75% senior notes. Excluding this charge, financial expenses decreased by $6 million. The lower financial expenses are primarily due to lower interest rates and the benefit of actions taken in the fourth quarter of 2003 to refinance a portion of the Company's long-term debt.
In North America revenues for the quarter were $1.19 billion compared to $1.23 billion in the first quarter of 2003. The decrease is primarily due to lower prices. Before restructuring and other charges, operating income increased to $87.0 million from $81.3 million and the operating margin increased to 7.3% compared to 6.6% in the first quarter of last year. Despite lower revenues several business groups showed an increase in volume compared to the same period last year. The Magazine group registered a 4% volume increase even though magazine ad pages, as measured by the Publishers Information Bureau, were down 2.3% on a year over year basis. In catalogs prices held steady but revenues decreased due to lower volume. Volume in our book business was flat compared to last year but volume increased substantially in the Directory group as we benefited from growing relationships with independent directory publishers. In our Retail group revenues increased as added volume helped offset price declines. In Commercial and Direct revenues were down due to reduced volume and lower pricing in the spot commercial market. In Canada, the market continues to be extremely competitive; excluding the favourable effects of currency translation revenues decreased by 12%.
In Europe, revenues in the first quarter were $315 million which represents a 3% increase compared to the same period last year, excluding the favourable impact of currency. Before restructuring and other charges, operating income was $11.9 million compared to a $1.9 million loss in the first quarter last year. The increase is the result of an improvement in our French operations due to added volume, especially in the French magazine platform and the benefits of restructuring. In addition, in our operations outside of France, all facilities except Austria, recorded increases in operating income despite a challenging market environment.
In Latin America revenues in the quarter increased 4% to $47 million compared to $45 million in the first quarter of 2003. This was largely the positive impact of currency translation. In general the print market in Latin America is showing signs of stabilizing and volumes and prices remained flat compared to the same period last year. As is the case in all our geographies, Latin America is continuing to focus on cost reduction and efficiency improvements.
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