Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its fourth quarter and full year 2013 consolidated financial results. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary, in which it holds a 75.4% interest.
2013 financial year
- Revenues up $28.3 million (0.7%) from 2012 to $4.28 billion.
- Adjusted operating income up $70.8 million (5.1%) to $1.45 billion.
- Net loss attributable to shareholders: $133.9 million ($1.08 per basic share) in 2013, compared with net income attributable to shareholders in the amount of $161.1 million ($1.27 per basic share) in 2012, an unfavourable variance of $295.0 million ($2.35 per basic share), including the total $299.4 million unfavourable non‑cash impact of fluctuations in the value of goodwill, intangible assets and derivative financial instruments.
- Adjusted income from continuing operations: $214.1 million in 2013 ($1.73 per basic share), compared with $182.3 million ($1.44 per basic share) in 2012, an increase of $31.8 million ($0.29 per basic share).
- The Telecommunications segment grew its revenues by $114.0 million (4.4%) and its adjusted operating income by $81.1 million (6.7%) in 2013 despite strong competition.
- Videotron Ltd. (“Videotron”) recorded revenue increases in 2013 for all its main services: mobile telephony ($49.1 million or 28.6%), Internet access ($45.9 million or 5.9%), cable telephony ($18.9 million or 4.2%), and cable television ($11.0 million or 1.0%).
- Videotron revenue‑generating units1 up 122,700 in 2013, compared with an increase of 221,800 in 2012. Videotron passed the five‑million revenue‑generating unit mark in 2013. At year’s end, there were 503,300 subscriber connections to the mobile telephone service launched in 2010.
- On February 19, 2014, Videotron acquired seven 700 MHz spectrum licences in Canada’s four most populous provinces for a cash consideration of $233.3 million in the Industry Canada spectrum auction.
- On December 19, 2013, Quebecor Media announced that it was abandoning door‑to‑door distribution of community newspapers and flyers in Québec and discontinuing distribution of the Le Sac Plus doorknob bag as of January 2014.
- On December 5, 2013, Sun Media Corporation announced the sale of 74 Québec weeklies to Transcontinental Interactive Inc., (“Transcontinental Interactive”), a subsidiary of Transcontinental Inc. (“Transcontinental”), for a cash consideration of $75.0 million.
- In November 2013, Quebecor reached a twelve-year agreement with Rogers Communications Inc. and the National Hockey League (“NHL”) whereby TVA Sports will become the NHL’s official French‑language broadcaster in Canada as of the 2014‑15 season.
- In May 2013, Videotron and Rogers Communications Partnership (“Rogers”) reached a 20‑year agreement to build out and operate a shared LTE mobile network in the Province of Québec and the Ottawa area.
- On May 8, 2013, Robert Dépatie replaced Pierre Karl Péladeau as President and Chief Executive Officer of Quebecor and of Quebecor Media. Manon Brouillette was named President and Chief Operating Officer of Videotron. On the same date, Pierre Karl Péladeau became Chairman of the Board of Quebecor Media and of TVA Group, and Vice Chairman of the Board of Quebecor.
- Following his decision to enter politics and run as a candidate, Pierre Karl Péladeau resigned from all his positions with Quebecor and its subsidiaries on March 9, 2014. Subsequently, Sylvie Lalande was appointed Chairperson of the Board of TVA Group on March 10, 2014 and Françoise Bertrand was appointed Chairperson of the Board of Quebecor Media on March 12, 2014. Robert Dépatie became a director of Quebecor, Quebecor Media and TVA Group on March 12, 2014.
Fourth quarter 2013
- Revenues up $5.7 million (0.5%) to $1.12 billion.
- Adjusted operating income up $25.2 million (6.9%) to $391.3 million. Adjusted operating income up $17.6 million (5.8%) in the Telecommunications segment.
- Net income attributable to shareholders: $43.4 million ($0.35 per basic share) in the fourth quarter of 2013 compared with $7.1 million ($0.06 per basic share) in the same period of 2012, a favourable variance of $36.3 million ($0.29 per basic share).
- Adjusted income from continuing operations: $68.0 million in the fourth quarter of 2013 ($0.55 per basic share), compared with $52.3 million ($0.42 per basic share) in the same period of 2012, an increase of $15.7 million ($0.13 per basic share).
- Videotron revenue‑generating units increased 35,100 in the fourth quarter of 2013.
Quebecor continued its growth in 2013 with a $70.8 million increase in adjusted operating income and a $31.8 million increase in adjusted income from continuing operations,” noted Robert Dépatie, President and Chief Executive Officer of Quebecor. “The Corporation also made a number of major strategic transactions and agreements, including the acquisition of seven 700 MHz spectrum licences across Canada, a 20‑year agreement with Rogers to build and operate a shared LTE wireless network, and the acquisition of French‑language broadcast rights to NHL games in Canada for the next 12 years. These transactions open immense opportunities for future development and growth for the Corporation.
“The 700 MHz operating licences acquired by Videotron on February 19, 2014 in the Industry Canada spectrum auction for $233.3 million cover the entirety of the provinces of Québec, Ontario (except Northern Ontario), Alberta and British Columbia. They make it possible to reach approximately 80% of Canada’s population, more than 28 million people. Quebecor Media could not let pass this opportunity to invest in the acquisition of such intrinsically valuable licences in the rest of Canada. While no decision has yet been made on how to use the spectrum, various options for maximizing the value of our investment are now available to us.”
“Videotron registered another stand‑out performance in 2013,” commented Manon Brouillette, President and Chief Operating Officer of Videotron. “Revenues and revenue‑generating units were up for the eleventh consecutive year, despite very competitive market conditions. Videotron’s revenues grew 4.4% to $2.71 billion and its adjusted operating income rose 6.7% to a record $1.28 billion. Average monthly revenue per user (“ARPU”) increased $6.46 (5.8%) to $118.03 in 2013. The results demonstrate Videotron’s ability to adapt effectively to the business environment, to approach product development and marketing with constantly renewed creativity, to stringently control its operating costs and to place the quality of the customer experience above all else at all times.
“During 2013, Videotron launched Club illico, a subscription video on demand service which carries the largest selection of unlimited on‑demand French‑language titles in Canada. By the end of 2013, the service had nearly 60,000 subscribers and had logged more than 11.0 million orders since its inception. Videotron also reached a 20‑year agreement with mobile carrier Rogers to build out and operate a shared LTE wireless network in Québec and the Ottawa area, which will be mutually beneficial to the two companies and their customers.”
“The refocusing of our news media operations continued in 2013,” commented Julie Tremblay, President and Chief Executive Officer of Sun Media Corporation. “The News Media segment’s adjusted operating income fell 7.0% to $97.7 million over the year 2013 but rose by 19.3% in the fourth quarter, reflecting among other things the impact of the many cost‑containment and repositioning measures implemented in recent years. The series of restructuring initiatives announced by Sun Media Corporation in 2013 are expected to yield an estimated $67.0 million in total annual savings, of which a significant portion remains to be realized in 2014. These savings will be used to finance expansion of value‑added content offerings on print and digital platforms. As part of its repositioning, Sun Media Corporation also announced in December 2013 the sale of 74 Québec community weeklies to Transcontinental Interactive for a $75.0 million cash consideration and its decision to discontinue its door‑to‑door distribution network as of January 2014.”
In the Broadcasting segment, adjusted operating income increased by $12.0 million (35.9%) in 2013 to $45.4 million, reflecting among other things the favourable impact of a retroactive adjustment to royalties for distant signal retransmission for the years 2009 to 2013, the decrease in the adjusted operating loss of SUN News General Partnership, as well as the positive impact of restructuring initiatives introduced by TVA Group in 2013 with a view to maintaining its leading position in Québec and safeguarding the quality of its content. With respect to business development, the TVA Sports specialty channel secured a strong position in 2013 by becoming the NHL’s official French‑language broadcaster in Canada for the next 12 years under an agreement of historic importance for the Broadcasting sector.
Quebecor Media pursued its diversification strategy by acquiring Event Management Gestev inc., a Québec City sporting and cultural event manager, in 2013, while TVA Group announced the acquisition of Les Publications Charron & Cie inc., publisher of La Semaine magazine, and of Charron Éditeur inc. Quebecor Media also sold the specialized websites Jobboom and Réseau Contact for a selling price of $65.0 million.
“On the financial front, Quebecor continued its efforts to reduce its refinancing risk in 2013 by seizing opportunities that will also significantly lower its interest expense, realizing annual savings of more than $20.0 million,” said Jean‑François Pruneau, Senior Vice President and Chief Financial Officer of Quebecor. “As well, Videotron issued Senior Notes in the aggregate principal amount of $400.0 million at an advantageous 5.625% interest rate, the first issue of high‑yield 12‑year Notes on the Canadian market. It should also be noted that the financial operations carried out since the beginning of 2012, including the purchase in October 2012 of part of the interest in Quebecor Media held by CDP Capital d’Amérique Investissement inc., a subsidiary of the Caisse de dépôt et placement du Québec, contributed to the 17.4% increase in adjusted income from continuing operations in 2013.”
“During 2013, Quebecor posted solid consolidated financial results and continued growth in the Telecommunications segment,” said Robert Dépatie. “As well, by carrying out major strategic transactions and disposing of certain activities that no longer fit its development objectives, Quebecor is positioning itself favourably to pursue its business development goals, grow its profits and maximize shareholder value going forward.”
1 - Revenue generating units are the sum of cable television, cable and mobile Internet access, and cable telephony service subscriptions and subscriber connections to the mobile telephony 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.
Senior Vice President and Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
Vice President, Public Affairs
Quebecor Media Inc.