Montréal, Québec - Quebecor Inc. (“Quebecor" or the “Corporation”) today reported its consolidated financial results for the third quarter of 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 condensed consolidated financial statements for the three-month and nine-month periods ended September 30, 2011 have therefore been prepared in accordance with IFRS and comparative figures for 2010 have been restated.
Third quarter 2011 highlights
- Revenues: $1.01 billion, up $44.9 million (4.6%) from the third quarter of 2010.
- Operating income down $12.3 million (-3.7%) to $319.7 million.
- Net income attributable to shareholders: $26.1 million ($0.41 per basic share), down $56.9 million ($0.88 per basic share) from $83.0 million ($1.29 per basic share) in the third quarter of 2010.
- Adjusted income from continuing operations: $40.0 million in the third quarter of 2011 ($0.63 per basic share), down $16.1 million ($0.24 per basic share) from $56.1 million ($0.87 per basic share) in the third quarter of 2010.
- Videotron Ltd. (“Videotron”) has recorded the largest quarterly customer growth since its acquisition by Quebecor Media in 2000; adding 168,700 revenue‑generating units1, up 79.9% from the growth recorded in the same quarter of 2010:
- net increase of 43,500 cable television customers, including a 77,700-subscriber increase for the digital service, the strongest quarterly growth for cable television since March 1999 and the strongest growth for the digital service since its launch, raising its penetration rate, as a proportion of all cable television customers, to 73.1%;
- net increase of 39,900 customers for the cable Internet access service, the largest increase in the last three years;
- net increase of 37,800 customers for the cable telephone service, the largest increase in the last two years;
- net increase of 47,500 subscriber connections to the mobile telephone service, the largest quarterly increase since the service was launched.
“Quebecor grew its revenues in the third quarter of 2011, mainly on the strength of the excellent performance of its Telecommunications segment,” said Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor. “Thanks in particular to effective strategies to market bundled services, including mobile telephone service, at a time when over‑the‑air analog television broadcasting was ending, Videotron posted the strongest quarterly growth in its total customer base since its acquisition by Quebecor Media in October 2000. The increase in revenue-generating units was 79.9% greater than the growth recorded in the same period of 2010. In terms of financial performance, the Telecommunications segment’s operating income increased by $10.9 million (4.1%) in the third quarter of 2011 despite additional operating costs generated by the new mobile telephone service. There were a total of 253,900 subscriber connections to Videotron’s 4G network as of September 30, 2011, including 181,200 new connections and 72,700 migrations from the mobile virtual network operator (“MVNO”) service. It was an exceptional quarter for all of our Telecommunications segment’s services from every point of view.
“Despite the adverse economic environment, which hit print media advertising revenues particularly hard, the Corporation continues investing in its News Media segment in order to protect and, in the case of some products, increase its market share. According to the NADbank 2010/11 survey, Le Journal de Montréal has a weekly readership of 1,194,400, which is 371,600 more than its closest competitor. Readership was up 16% in the 18-24 age bracket. The NADbank 2010/11 survey also found that the free daily 24 heures had added 45,000 readers, an 8.1% increase from the previous survey. As well, Quebecor Media Network Inc. (“Quebecor Media Network”) launched Le Sac Plus during the third quarter. In addition to distributing all of Quebecor Media’s community newspapers, the Le Sac Plus door‑knob bag contains advertising materials such as flyers, leaflets, product samples and other value‑added promotions every week.The Quebecor Media Network has also signed an agreement with the Jean Coutu Group (PJC) Inc. pharmacy chain to distribute its flyers in Le Sac Plus. The flyers are already being printed by Quebecor Media Printing Inc. under a previously announced contract, illustrating the complementary nature of the News Media segment’s multiproduct offerings.
“As part of its diversification strategy, aimed at reducing the concentration of its business in a single conventional television network, TVA Group Inc. (“TVA Group”) continued expanding its line of products with the successful launch of its TVA Sports channel, which has signed a series of partnerships with major sporting events in order to deliver rich programming. TVA Group’s results were also affected by launch costs for the new channels and the adverse impact of the economic environment.
“In the same spirit, Quebecor will implement its business plan for management of the multipurpose arena, which is to be operational by September 2015, following the signing of final agreements with Québec City in early September, 2011. Quebecor reiterates its goal of acquiring a National Hockey League franchise for the facility, as well as presenting major events and shows in the venue.
“Finally, when it comes to our financial results, it is important to note that the $56.9 million decrease in net income attributable to shareholders in the third quarter of 2011 was caused mainly by remeasurement of financial instruments, which had an unfavourable non‑cash impact in the amount of $48.4 million, net of taxes and non‑controlling interest. The balance of the decrease was due to operating items, including investments in new products and services. Higher subscriber acquisition costs for the new 4G network and an increase in the amortization charge for 4G network equipment and licences reduced net income by a total of $14.9 million, net of income taxes and non-controlling interest.
“In short, it was an excellent quarter for Quebecor in terms of customer growth, product development and business opportunities, strengthening the foundations for the Corporation’s future growth.”
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.