Business News
Quebecor Inc. Reports Consolidated Results for First Quarter 2009
Thursday 14. May 2009 - Quebecor Inc. ("Quebecor") (TSX:QBR.A)(TSX:QBR.B) today reported its consolidated financial results for the first quarter of 2009. Quebecor consolidates the financial results of its Quebecor Media Inc. subsidiary ("Quebecor Media"), in which it holds a 54.7% interest.
Highlights since end of 2008
– Quebecor records revenues of $896.2 million, up $19.1 million (2.2%) from first quarter 2008.
– Operating income(1): up $15.5 million (6.0%) to $272.2 million.
– Income from continuing operations: $57.7 million ($0.90 per basic share), up $12.6 million (27.9%) from $45.1 million ($0.70 per basic share) in same period of 2008.
– Adjusted income from continuing operating activities(2): $43.1 million in first quarter 2009 ($0.67 per basic share), up $8.5 million (24.6%) from $34.6 million ($0.54 per basic share) in same period of 2008.
– Cable segment: operating income up $27.0 million (13.7%). Customer growth in first quarter 2009: +38,900 for cable telephone service, +25,500 for cable Internet access, +13,600 for cable television service (including 35,900 customer increase for illico Digital TV), +4,600 activated phones for wireless telephone service.
– March 5, 2009: Videotron Ltd. (“Videotron”) optimizes liquidity position in a difficult financial market by issuing US$260.0 million aggregate principal amount of Senior Notes at effective rate of 9.35%, for net proceeds of $332.4 million.
– March 30, 2009: Videotron reaches agreement to renew its collective agreements encompassing all of its 2,822 unionized employees, including Montreal, Sherbrooke and Quebec City until December 31, 2013, Saguenay-Lac-St-Jean until January 31, 2014, and Gatineau until August 31, 2015.
(1) See “Operating income” under “Definitions.”
(2) See “Adjusted income from continuing operations” under “Definitions.”
“Despite the challenging economic and financial environment in the first quarter of 2009, Quebecor managed to increase its financial manoeuvring room and to grow its revenues, operating income and net income from continuing operations,” said Pierre Karl Peladeau. “The Cable segment, which continues to register customer growth for all of its services quarter after quarter, accounts for the bulk of the improvement in results. In addition, the renewal of Videotron’s collective agreements with its 2,822 unionized employees will help it to carry out its business plan in the coming years, as it enters a new phase in its development with the roll-out of advanced wireless services.
“Meanwhile, the restructuring initiatives in the Newspapers segment, launched in late 2008, are progressing according to schedule and generated estimated savings of $7.0 million in the first quarter of 2009. These initiatives, combined with other factors, helped mitigate the impact of the economic crisis, which was particularly acute in the newspaper business. The positive financial effects of the restructuring initiatives are expected to grow going forward, as other measures designed to enhance operational efficiency, productivity and optimal use of resources are implemented. These measures include our ISO program, launched a few years ago, which has now been extended to the newspapers we acquired with the takeover of Osprey Media. At the same time, we will continue exploring other cost-reduction opportunities while we search for new revenue streams, including those related to the marketing of the content produced by our QMI press agency.”
Table 1
Quebecor first quarter financial highlights, 2005-2009
(in millions of Canadian dollars, except per share data)
————————————————————————–
————————————————————————–
2009 2008 2007 2006 2005
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Revenues $896.2 $877.1 $751.1 $695.9 $622.8
Operating income(a) 272.2 256.7 183.5 158.2 147.5
Income from continuing
operations 57.7 45.1 3.4 (59.6) (26.1)
Net income (loss) 57.7 428.4(c) (14.4) (60.8) (23.7)
Adjusted income from
continuing operating
activities(b) 43.1 34.6 16.8 10.5 3.1
Per share data:
Income from continuing
operations 0.90 0.70 0.05 (0.93) (0.40)
Net income (loss) 0.90 6.66 (0.22) (0.95) (0.37)
Adjusted income from
continuing operating
activities(b) 0.67 0.54 0.26 0.16 0.05
————————————————————————–
(a) See “Operating income” under “Definitions.”
(b) See “Adjusted income from continuing operating activities” under
“Definitions.”
(c) Including $399.7 million gain resulting from deconsolidation of
Quebecor World Inc.
Analysis of first quarter 2009 results
– Quebecor’s revenues increased $19.1 million (2.2%) to $896.2 million.
– Revenues increased in the following segments: Cable (by $46.9 million
or 10.9% of segment revenues), mainly because of customer growth for
all services, Broadcasting ($3.3 million or 3.1%), Interactive
Technologies and Communications ($2.1 million or 10.2%), and Leisure
and Entertainment ($1.5 million or 2.4%).
– Revenues decreased in Newspapers (by $32.6 million or -11.7%), mainly
as a result of lower advertising revenues.
– Operating income increased $15.5 million (6.0%) to $272.2 million, due
primarily to an increase in the Cable segment ($27.0 million or 13.7% of
segment operating income) resulting mainly from customer growth.
Operating income decreased $16.3 million (-35.4%) in the Newspapers
segment.
– Quebecor’s net income totalled $57.7 million ($0.90 per basic share) in
the first quarter of 2009, compared with $428.4 million ($6.66 per basic
share) in the same period of 2008.
– Favourable variances in the following items:
– $15.5 million increase in operating income;
– $15.0 million decrease in income tax expense;
– $13.0 million decrease in financial expenses;
were outweighed by:
– recognition in first quarter 2008 of income from discontinued
operations in the amount of $383.3 million;
– $22.0 million increase in non-controlling interest;
– $7.6 million increase in amortization charge.
– Adjusted income from continuing operating activities: $43.1 million in
the first quarter of 2009 ($0.67 per basic share), compared with $34.6
million ($0.54 per basic share) in the same period of 2008, an increase of
$8.5 million ($0.13 per basic share), or 24.6%.
Financing activities
On March 5, 2009, Videotron issued US$260.0 million aggregate principal amount of Senior Notes at an effective rate of 9.35%, for net proceeds of $332.4 million (including accrued interest and before financing expenses). Videotron used the proceeds to repay all drawings under its senior secured credit facility and the remainder for general purposes. In the context of the current instability of the financial markets, Videotron seized the opportunity to optimize its liquidity position through this offering.
Dividend
On May 13, 2009, the Board of Directors of Quebecor declared a quarterly dividend of $0.05 per share on Class A Multiple Voting Shares and Class B Subordinate Voting Shares, payable on June 22, 2009 to shareholders of record at the close of business on May 29, 2009. This dividend is designated to be an eligible dividend, as provided under subsection 89(14) of the Canadian Income Tax Act and its provincial counterpart.
Quebecor – Discontinued operations
On January 21, 2008, Quebecor World Inc. (“Quebecor World”) and its U.S. subsidiaries were granted creditor protection under the Companies’ Creditors Arrangement Act in Canada. On the same date, its U.S. subsidiaries also filed a petition for creditor protection under Chapter 11 of the United States Bankruptcy Code. Accordingly, Quebecor’s investment in Quebecor World has no longer been consolidated since January 21, 2008, and Quebecor World’s activities are considered “Discontinued Operations” for the purposes of Quebecor’s consolidated financial statements.
The net assets deficiency and the accumulated comprehensive loss were reversed upon deconsolidation on January 21, 2008, generating a net gain of $399.7 million, net of the $35.1 million decrease in the income tax asset related to the investment in Quebecor World.