Quebecor earns $37.8 million in third quarter
Montreal, - Despite a bitter labour dispute in its cable division, multimedia giant Quebecor Inc. posted a third-quarter profit of $37.8 million while reducing its heavy debt burden.
Quebecor said it earned 59 cents a share in the three months ended Sept. 30, compared with a loss of $34.6 million or 54 cents a share last year.
Revenues rose to $3.05 billion from $3.01 billion as the company benefited from increased business from some of its subsidiaries, including its Quebecor World commercial printing unit.
``We are the most profitable (printing company) even in the very tough economic environment like the one we've been facing in the last year,'' chief executive Pierre Karl Peladeau said during a conference call.
The heavily indebted company also noted that financing expenses fell by $47.1 million in the third quarter because of lower interest rates and Quebecor's success in lowering overall debt.
Quebecor's consolidated debt totalled $6.94 billion, a decrease of $219 million since last December.
``All our subsidiaries are contributing to the achievement of the management team's two overriding priorities: increasing our
profitability and reducing our debt,'' said Peladeau.
Chief financial officer Claude Helie suggested that a good part of the company's debt could be restructured following negotiations with lenders about a $430-million bridge loan.
Analyst David McFadgen of National Bank Financial said observers will be watching closely the result of those talks.
``If they're able to loosen the covenants of Videotron and Sun Media (debt) it would be very positive,'' he said.
Aside from ongoing costs associated with the Videotron cable strike, Quebecor's operations appear to be pretty stable, McFadgen added.
``They're pretty much in line with expectations,'' he said of the quarterly results.
Quebecor said the six-month strike by unionized cable employees has cost the company $19 million. Of the $9.4 million lost in the
last quarter, $3 million was spent compensating customers for lost service after cables were cut, allegedly by striking employees.
The company claims to have lost some 27,000 customers during the labour dispute. However, efforts to sign up customers to its digital
service have mitigated some of those losses, said Peladeau.
``Considering the troubled environment this year, we are reasonably satisfied this year with the Videotron performance in this quarter.''
Among the earnings highlights:
Quebecor World reported third-quarter revenues of $2.53 billion, compared with $2.51 billion in the same period of 2001. Operating income fell by 2.8 per cent to $393 million.
Cable television contributed $174.3 million in the third quarter to Quebecor Media's revenues, compared with $178.4 million a
year earlier. The $4-million decrease was due to lower revenues and customer credits resulting from the Videotron strike.
Sun Media revenues totalled $200.2 million, a 1.5 per cent increase from the same period in 2001. Advertising revenues rose five per cent but the increase was partially offset by lower printing revenues.
Broadcaster TVA Group contributed $68.1 million to revenues and $13 million to operating income. That compared with $72 million and $10.9 million respectively a year earlier.
Videotron generated revenues of $533.9 million and operating income of $189.5 million. Revenues increased by $4.3 million, or one per cent, and operating income decreased by $11.8 million, or 5.9 per cent.
Quebecor operates in North America, Europe, Latin America and Asia through two operating subsidiaries, Quebecor World, the world's biggest commercial printer, and Quebecor Media, which owns the Sun Media newspaper chain, the Videotron Group cable TV company, broadcaster TVA group and other properties.
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