Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the second quarter of 2013. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary, in which it holds a 75.4% interest.
Second quarter 2013 highlights
- Revenues up $8.6 million (0.8%) from the second quarter of 2012 to $1.09 billion.
- Operating income up $14.2 million (4.0%) to $367.8 million.
- Net loss attributable to shareholders: $45.1 million ($0.73 per basic share) in the second quarter of 2013, compared with net income attributable to shareholders of $65.5 million ($1.02 per basic share) in the same period of 2012, an unfavourable variance of $110.6 million ($1.75 per basic share) including the $130.0 million unfavourable non-cash impact of valuation of financial instruments (net of income tax and non-controlling interest).
- Adjusted income from continuing operations: $52.9 million in the second quarter of 2013 ($0.85 per basic share) compared with $46.1 million ($0.72 per basic share) in the second quarter of 2012, an increase of $6.8 million ($0.13 per basic share).
- Telecommunications segment’s revenues up $30.8 million (4.8%) and operating income up $23.0 million (7.7%) in the second quarter of 2013.
- Videotron Ltd. (“Videotron”) records second quarter 2013 revenue increases at all of its major services: Internet access ($12.5 million or 6.5%), mobile telephony ($12.2 million or 29.8%), cable telephony ($6.4 million or 5.7%) and cable television ($3.5 million or 1.3%).
- Videotron revenue-generating units1 up 13,000 in the second quarter of 2013 (compared with an increase of 31,100 in the same quarter of 2012) and up 204,600 (4.3%) in the 12-month period ended June 30, 2013.
- Subscriber connections to the mobile telephony service up 30,200 in the second quarter of 2013 and 103,500 in the 12‑month period ended June 30, 2013.
- On May 29, 2013, Videotron and Rogers Communications Partnership (“Rogers”) reached a 20‑year agreement to build out and operate a shared LTE (Long Term Evolution) mobile network in Québec and the Ottawa areas.
Quebecor continued its growth in the second quarter of 2013 with a 4.0% increase in operating income and a 14.8% increase in adjusted income from continuing operations,” said Robert Dépatie, President and Chief Executive Officer of Quebecor. “Despite the highly competitive business environment, Quebecor reported improved results, spearheaded by the Telecommunications segment’s excellent numbers. Since the beginning of 2012, financial transactions that create value for shareholders have also contributed to the increase in adjusted income from continuing operations.
“Videotron posted strong results again in the second quarter of 2013, growing its revenues by 4.8% and its operating income by 7.7%,” said Manon Brouillette, President and Chief Operating Officer of Videotron. “Once again, all of Videotron’s core services generated revenue increases, particularly Internet access and mobile telephony. Average monthly revenue per user (“ARPU”) continued to grow, climbing $6.49 (5.9%) to $117.24. During the second quarter of 2013, Videotron introduced the multiroom PVR, a new functionality that lets subscribers to illico TV new generation play back their favourite shows on any television set in the home. The second quarter results clearly demonstrate Videotron’s ability to adapt to the competitive environment in which it operates. Videotron’s success is rooted in its creativity in the marketing of new products, development of complementary revenue streams, ongoing alignment of its cost structure, and superior customer experience.
“When it comes to business expansion, we are very pleased with the 20-year agreement Videotron has reached with mobile carrier Rogers to build out and operate a shared LTE mobile network in Québec and the Ottawa area. This unique agreement will benefit both companies as well as their customers.”
“In the media sphere, Quebecor continued refocusing its operations by working to leverage its core business across all available platforms, including digital, and to develop new content that can be brought to all platforms,” said Robert Dépatie. “A new business unit, QMI Digital, has been created: it will be a centre of expertise in digital technology with a strong emphasis on research and development. Caroline Roy will become Vice President, Development and Strategy, of QMI Digital on August 26,2013. At the same time, Aldo Giampaolo, a top-level manager with extensive experience in the management of large‑scale events and of major venues for sporting and cultural events, has been appointed President and Chief Executive Officer of Quebecor Media Entertainment & Sports Group. His expertise will be particularly useful for the development and management of the Québec City Amphitheatre, now under construction.
“In connection with the refocusing of its operations, Quebecor also completed several strategic business acquisitions and disposals. Quebecor Media acquired Event Management Gestev Inc. (“Gestev”), a Québec City sporting and cultural event manager, in the second quarter of 2013, while TVA Group Inc. (“TVA Group”) announced the acquisition of Les Publications Charron & Cie inc., publisher of La Semaine magazine, and of Charron Éditeur inc. in July 2013. Quebecor Media also sold its specialized Web sites Jobboom and Réseau Contact for a cash consideration of $65.0 million, subject to technology transfer conditions.
“Meanwhile, Quebecor had to introduce new rationalization and cost-containment initiatives in its traditional media business. In July 2013, Sun Media Corporation announced new restructuring measures that will entail the elimination of 360 positions, the closing of 8 publications and 3 free urban newspapers, and efforts to enhance operational efficiencies. The measures are expected to yield total annual savings of approximately $55.0 million. Sun Media Corporation intends to use the savings to support continued investment in and expansion of its newspapers and publications, particularly on digital platforms. TVA Group also announced a restructuring plan designed to maintain its leadership position in Québec and safeguard the quality of its content. The plan includes the elimination of approximately 90 positions, or 4.5% of TVA Group’s total workforce.”
“On the financial front, Videotron and Quebecor Media closed new financing arrangements on June 17 and August 1, 2013: respectively an issuance of 5.625% Senior Notes with a 12-year term and a 7-year institutional loan at the U.S. London Interbank Offered Rate (“LIBOR”) plus 2.5% (subject to a LIBOR floor),” said Jean‑François Pruneau, Senior Vice President and Chief Financial Officer of Quebecor. “The opportunistic financing transactions carried out by Quebecor Media and Videotron in 2012 and since the beginning of 2013 are expected to yield annual debt interest savings in excess of $50.0 million.”
In short, since the end of the first quarter of 2013, Quebecor has continued implementing its strategy with high‑potential initiatives related to organizational restructuring, strategic investment, transformation of traditional media outlets and reduced financing costs. All these initiatives are consistent with the Corporation’s long-term growth, business development and profitability objectives.
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.