Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Company”) today reported its full year and fourth quarter consolidated financial results for 2011. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary, in which it holds a 54.7% interest.
Quebecor adopted International Financial Reporting Standards (“IFRS”) on January 1, 2011. The Corporation’s consolidated financial statements for the full year and fourth quarter of 2011 have therefore been prepared in accordance with IFRS and comparative data for 2010 have been restated. For more information, see “Transition to IFRS” below.
2011 financial year:
- Revenues: up $206.5 million (5.2%) to $4.21 billion in 2011 due to sustained growth in the Telecommunications segment.
- Operating income: up $8.3 million (0.6%) from 2010 to $1.34 billion.
- Net income attributable to shareholders: $201.0 million ($3.14 per basic share), down $24.3 million ($0.36 per basic share) from $225.3 million ($3.50 per basic share) in 2010.
- Adjusted income from continuing operations: $191.5 million in 2011 ($2.99 per basic share), down $29.1 million ($0.43 per basic share) from $220.6 million ($3.42 per basic share) in 2010.
- Videotron Ltd. (“Videotron”) added 375,800 revenue‑generating units1, its largest annual customer growth since 2008 and a 39.3% increase over the growth recorded in 2010:
- Net increase of 49,900 cable television customers in 2011 (34,600 in 2010), including a 181,200‑subscriber increase for the digital service (135,500 in 2010), the strongest annual growth for the digital service since its launch in 1999. Total revenues from cable television services passed the $1 billion mark.
- Net increase of 80,400 customers for the cable Internet access service (81,500 in 2010).
- Net increase of 91,000 customers for the cable telephony service (100,300 in 2010).
- Net increase of 154,500 subscriber connections for the mobile telephony service. As of December 31, 2011, Videotron’s 4G network was available to nearly seven million people in Québec and eastern Ontario.
Fourth quarter 2011:
- Revenues: $1.15 billion in the fourth quarter of 2011, up $59.8 million (5.5%) from the same quarter of 2010.
- Operating income: $369.2 million, an increase of $10.1 million (2.8%).
- Net income attributable to shareholders: $85.4 million ($1.34 per basic share) compared with $46.6 million ($0.72 per basic share) in the fourth quarter of 2010, an increase of $38.8 million ($0.62 per basic share).
- Adjusted income from continuing operations: $55.6 million in the fourth quarter of 2011 ($0.87 per basic share), compared with $58.2 million ($0.90 per basic share) in the fourth quarter of 2010, a decrease of $2.6 million ($0.03 per basic share).
Quebecor grew its revenues by $206.5 million or 5.2% in 2011, mainly because of the sustained performance of our Telecommunications segment,” commented Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor. “Videotron achieved its largest annual customer base growth in three years, with a 39.3% increase over the growth recorded in 2010. The strong performance was due, among other things, to effective bundling strategies at a time when over‑the‑air analog television broadcasting was coming to an end. With respect to financial results, the Telecommunications segment’s operating income was up $51.5 million (4.9%) from 2010, despite additional operating costs generated by the new mobile telephony service launched in September 2010. At the end of 2011, there were 290,600 subscriber connections to the mobile service, including 154,900 subscriber additions in 2011. It was a remarkable year in all respects for all of the Telecommunications segment’s services
“In our News Media and Broadcasting segments, we continued developing our business proposition to local, provincial and national advertisers in 2011. In view of ongoing technological change and the proliferation of media and content delivery channels, we decided to adapt our offerings to changing and converging communications methods and channels. The contracts signed by our National Sales Offices in Ontario and Québec now combine the development, production and implementation of full, innovative, convergent advertising and marketing plans. Capitalizing on the strength of their well‑known brands and leveraging all forms of media creativity, our National Sales Offices now offer advertisers one-stop shopping. We now have the ability to run a multimedia communications campaign on all of Quebecor Media’s platforms in order to create a promotional event that can reach target audiences quickly and on a massive scale.
“The launch of the Le Sac Plus door-knob bag in August 2011 also illustrates our ability to interact with consumers. The contracts to print the Jean Coutu Group (PJC) Inc. pharmacy chain’s flyers and to distribute them in the door‑knob bag demonstrate the complementary fit among Quebecor Media’s multiproduct offerings. In addition to distributing all of Quebecor Media’s community newspapers in Québec, the Le Sac Plus bag contains advertising materials such as flyers, leaflets, product samples, and other value‑added promotions every week.
“Keeping pace with changes in communications channels and methods, the new Le Journal de Montréal and Le Journal de Québec websites launched in February 2012 offer an exceptional user experience, in line with Sun Media Corporation’s innovative Internet approach, already implemented at other dailies. While the new sites reflect the tone and style that have made the print versions of the newspapers successful, they offer more videos and photos, as well as increased opportunities for interaction with columnists, leveraging Quebecor Media’s full potential for convergence.
“For its part, TVA Group Inc. (“TVA Group”) continued diversifying and expanding its product line-up in 2011 by launching a number of specialty channels: the English-language news and opinion channel Sun News Network (“Sun News”), TVA Sports, and the women’s channel Mlle. TVA Group signed agreements with, among others, Bell and Rogers Communications Inc. in 2011 and 2012, securing carriage of a number of its specialty channels on Canada’s largest cable providers.
“The News Media and Broadcasting segments’ financial results were affected in 2011 by the major investments required for product and service launches, and by the impact of increased competition and of the economic climate on the advertising market. Management considers these investments to be necessary in order to diversify the Corporation’s activities beyond its traditional lines of business and to optimize the significant expertise it has developed over the decades.
“Alongside our revenue-stimulation initiatives, we launched new restructuring and cost-containment efforts in our News Media segment in the fourth quarter of 2011. We introduced measures that will reduce Sun Media Corporation’s staff by 400 employees and should yield annual savings in excess of $20.0 million. However, at the corporate level, those headcount reductions were more than offset by the creation of approximately 1,000 jobs in our Telecommunications segment.
“With respect to corporate expansion, the acquisition of Les Hebdos Montérégiens in early 2011 strengthened Quebecor Media’s distribution network in Québec. The acquisition of an interest in a Quebec Major Junior Hockey League team in June 2011 will make new content available on the Corporation’s various media platforms. Also, in September 2011, Quebecor Media’s Nurun Inc. (“Nurun”) subsidiary acquired a digital agency located in San Francisco, U.S.A., that has extensive expertise in brand promotion and interactive product development. Finally, in February 2012, a joint venture with Saguenay‑area entrepreneurs created BlooBuzz Studios L.P., a company engaged in the booming business of video game development for occasional players; Quebecor Media is thus entering a new market that is growing at a spectacular pace, particularly on mobile platforms.
“As we review the events of 2011, we must also note the final agreement on management and naming rights to the future arena in Québec City, for an initial 25‑year period. Quebecor Media now has all the tools it needs to pursue its goals, which are to manage a world‑class multipurpose center and to bring a National Hockey League team to Québec City.
“Several financial operations were completed in 2011 and early 2012 to extend the maturity dates of Quebecor’s debt, increasing it from a weighted average of 4.9 years as at December 31, 2010 to 6.6 years as at December 31, 2011, considering, on a pro forma basis, the operations carried out at the beginning of 2012. These transactions will also yield annual savings in financial expenses estimated at $30.0 million. We are gratified by the confidence the financial markets have shown in us.
In conclusion, the many achievements of 2011 and early 2012 have laid solid foundations for several promising projects at Quebecor and its subsidiaries. We are looking to the future with confidence and optimism, concluded Pierre Karl Péladeau.
1 - Revenue-generating units are the sum of cable television, Internet access and cable telephone service subscriptions, plus subscriber connections to the mobile telephone service.
For more details and to consult definitions of "operating income" and "adjusted income from continuing operations", please refer to the attached PDF file for the complete version of the press release.
Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
J. Serge Sasseville
Vice President, Corporate and Institutional Affairs
Quebecor Media Inc.