Quebecor Reports 1Q: Still Securing the Largest Accounts in the Industry
Press release from the issuing company
GREENWICH, Conn.--April 25, 2002--Quebecor World Inc. today announced first quarter 2002 diluted earnings per share of $0.28. Revenues for the quarter were $1.46 billion down 7% compared to first quarter 2001 due to the continued weakness of the global advertising market. However, net income for the quarter increased by 8% to $46 million compared to $43 million last year. This year's results incorporate the new accounting rules relating to the non-amortization of goodwill.
Quebecor World's results from operations are starting to benefit from the Company's restructuring initiatives announced in October. Some North American Product Groups, which have largely completed their planned plant closures and staff reductions, are showing improved margins.
"I am pleased the savings and efficiencies planned for in the restructuring initiative are being reflected in our results," said Charles G. Cavell, President and CEO of Quebecor World. "The Company should benefit greatly when the market demand and advertising spending return to normal levels."
The restructuring initiatives announced in October 2001 are ahead of plan, with 10 facility closures already announced or completed. Management expects the restructuring plan will be substantially completed by the end of the Third Quarter, 2002, positioning Quebecor World to take full advantage of increasing operating leverage as the economy recovers. The current focus of management is to execute the 2001-2002 restructuring plan to improve efficiency and to improve the Company's financial condition through the reduction of bank borrowings.
In North America while magazine ad pages continue to be down year over year for the quarter, recent figures for March show an improving trend and we are hopeful this will lead to an upturn in the third and fourth quarter of 2002. Quebecor World continues to partner with the leading publishers and retailers in the industry and in 2001 we completed the largest transactions in the industry. In addition the Company had contract wins and renewals for such important customers as Brylane and Victoria's Secret.
After an extensive review of Quebecor World's goodwill it has been determined there is no impairment and therefore no financial correction required.
"Quebecor World is a company that has been built through acquisition, more than 85 during the last ten years. While we are looking at opportunities in all our geographies it is difficult to fully assess value in this market. Unlike many other companies, our goodwill has been determined to be fairly valued. This demonstrates that we buy when the price is right. This will continue to be our strategy going forward," said Mr. Cavell.
During the quarter Quebecor World completed the acquisition of the European printing assets of Hachette Filipacchi Medias. These assets consist of printing, binding and logistics facilities in France and a gravure plant in Belgium. Under the terms of the agreement Quebecor World has been awarded a long-term agreement to print many of Hachette publications in France, the right of first refusal on Hachette publications it doesn't already print and the right of first refusal on new publications in Europe.
Quebecor World's European revenues declined 7% compared to the same period in 2001 with the majority of the decrease attributed to France. The Company is implementing a cost reduction program. In Spain, Quebecor World signed its first European directory contract with Telefonica de Espana to provide approximately one-third of the telephone directories in Spain.
Our Latin American business continues to grow with revenues increasing 37% in the first quarter. Quebecor World is increasing market share in its leading directory and book platforms. The Company recently signed a directory contract with Telefonica, owned by Telefonica de Espana, to serve customers in Peru, Argentina and Brazil. QW Latin America now prints 58 billion directory pages a year for eight Latin American countries.
This is approximately twice as many pages as Quebecor World prints in Canada.
Quebecor World has also signed book contracts with several leading Latin American publishers including Editorial Estrada and AZ Editora in Argentina, Zamora Ediciones S.A. in Colombia, Rezza Editores S.A. de C.V. in Mexico and Editora Melhoramentos in Brazil. The combined value of the contracts is approximately $100 million over the life of the contracts. All are long-term contracts of more than three-years, a significant accomplishment for Quebecor World given that book publishers have historically chosen to award short-term contracts.
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