Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its consolidated financial results for the third quarter of 2012. Quebecor consolidates the financial results of its Quebecor Media Inc. (“Quebecor Media”) subsidiary. The Corporation’s interest in Quebecor Media increased from 54.7% to 75.4% on October 11, 2012 as a result of the purchase of part of the interest held by CDP Capital d’Amérique Investissement inc. (“CDP Capital”), a subsidiary of the Caisse de dépôt et placement du Québec.
Third quarter 2012 highlights
- Revenues: $1.06 billion, up $44.3 million (4.4%) from the third quarter of 2011.
- Operating income up $33.1 million (10.4%) to $352.8 million.
- Net income attributable to shareholders: $18.6 million ($0.30 per basic share), down $7.5 million ($0.11 per basic share) from $26.1 million ($0.41 per basic share) in the third quarter of 2011.
- Adjusted income from continuing operations $52.1 million ($0.83 per basic share), up $12.1 million (30.2% or $0.20 per basic share) from $40.0 million ($0.63 per basic share) in the third quarter of 2011.
- Revenue increases in the third quarter of 2012 from all main services of Videotron Ltd. (“Videotron”): Internet access ($18.5 million or 10.5%), cable television ($16.3 million or 6.4%), mobile telephony service ($13.3 million or 41.8%) and cable telephony service ($4.1 million or 3.7%). Operating income up $34.5 million (12.5%).
- Videotron’s revenue generating units1 up by 101,100 in the third quarter of 2012 and by 264,600 (5.8%) in the 12‑month period ended September 30, 2012. Average monthly revenue per user (“ARPU”) up $7.99 (7.7%) to $112.32 in the third quarter of 2012.
- Purchase on October 11, 2012 of part of CDP Capital’s interest in Quebecor Media for a consideration of $1.50 billion, increasing the Corporation’s interest in Quebecor Media from 54.7% to 75.4%.
- Total non-cash charge of $187.0 million for impairment of goodwill and intangible assets, in accordance with International Financial Reporting Standards (“IFRS”) accounting valuation principles, reflecting continuing weak market conditions in the newspaper and music industries.
- New approach to management of newspaper publishing operations announced. Comprehensive optimization of Sun Media Corporation’s operational and business processes will generate estimated annual savings of more than $45.0 million.
The Corporation continued its growth in the third quarter of 2012 despite a fiercely competitive business environment in most of its lines of business,” said Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor. “It increased its revenues by 4.4%, its operating income by 10.4% and its adjusted income from continuing operations by 30.2%, confirming the profitability of the major investments made in recent years.
We are very satisfied with the growth recorded by Videotron in the third quarter of 2012, said Robert Dépatie, President and Chief Executive Officer of Videotron.
Revenues from Videotron’s main services were all up substantially, enhancing the Telecommunications segment’s operating income by $34.5 million, a significant 12.5% increase. Videotron recorded a net increase of 101,100 revenue generating units and a 7.7% increase in average monthly revenue per user compared with the same period of the previous year. It is noteworthy that the cable television subscriber losses recorded in the second quarter of 2012, during moving season, were almost entirely made up in the third quarter of 2012. In the 12-month period ended September 30, 2012, the total number of revenue generating units increased by 264,600 (5.8%). Subscriber additions to the mobile network since its launch have contributed to customer growth and increase in profitability. Videotron stands out among Canada’s major telecommunications carriers with the highest quarterly growth rate in operating income.
A major event that has occurred since the end of the second quarter of 2012 will mark Quebecor’s history: the purchase of part of CDP Capital’s interest in Quebecor Media for $1.50 billion, said Jean-François Pruneau, Chief Financial Officer of Quebecor.
This transaction will enable the Corporation to benefit from the growth we anticipate for this subsidiary in the coming years, while continuing its partnership with CDP Capital. It was carried out in accordance to the Corporation’s fundamental financial objectives of maintaining a sufficient level of operational and financial flexibility. This transaction was a positive for both our financial partner, which has supported us since the creation of Quebecor Media in 2000, and our shareholders.
To allow the News Media segment the decision-making and operational flexibility it needs to respond effectively to the profound upheaval in the media industry around the world, Sun Media Corporation undertook a comprehensive review of its approach and business processes. Its innovative plan will streamline decision-making and operational structures in order to achieve greater efficiency in all activities, from the editorial to the industrial operations. Sun Media Corporation is also planning to redesign its sales activities to strengthen its business strategy. At a time of negative growth in the industry, maintaining reasonable cost‑effectiveness is essential. This objective will be achieved in the News Media segment through improved execution and greater responsiveness to customer’ needs and to local and national business opportunities, combined with the estimated annual savings of more than $45.0 million that will be generated by the new program.
In summary, the third quarter of 2012 was marked by excellent financial results and by ongoing restructuring and adaptation efforts by the Corporation’s segments. In addition, immediately after the end of the quarter, the Corporation concluded one of the largest financial transactions in the history of Quebecor Media aimed at continuing the achievement of its business development, profitability and growth objectives.
1 - Revenue generating units are the sum of cable television, cable and wireless Internet access and cable telephony service subscriptions, plus 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.
Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
Vice President, Public Affairs
Quebecor Media Inc.