Montréal, Québec – Quebecor Inc. (“Quebecor” or the “Corporation”) today reported its fourth quarter and full‑year consolidated financial results for 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 repurchase of part of the interest held by CDP Capital d’Amérique Investissement inc. (“CDP Capital”), a subsidiary of Caisse de dépôt et placement du Québec.

 

Highlights

2012 financial year

• Revenues up $145.2 million (3.5%) to $4.35 billion in 2012, mainly because of the 8.4% revenue growth in the Telecommunications segment.
• Operating income up $61.9 million (4.6%) from 2011 to $1.40 billion.
• Net income attributable to shareholders: $167.7 million ($2.65 per basic share), down $33.3 million ($0.49 per basic share) from $201.0 million ($3.14 per basic share) in 2011.
• Adjusted income from continuing operations: $196.1 million ($3.10 per basic share) in 2012, up $4.6 million ($0.11 per basic share) from $191.5 million ($2.99 per basic share) in 2011.
• Revenues of Videotron Ltd. (“Videotron”) up in 2012 for all major services: Internet access (up $74.3 million or 10.6%), cable television ($66.7 million or 6.6%), mobile telephony ($58.9 million or 52.3%), and cable telephony ($18.2 million or 4.2%).
• Videotron’s revenue generating units¹ up 221,800 in 2012 compared with an increase of 379,100 in 2011, which was bolstered by the discontinuation of the over‑the‑air analog television broadcasting in Canada.
• Despite aggressive competition in its footprint, Videotron recorded in 2012 the largest growth in revenue generating units, in absolute terms, of all Canadian cable operators.
• Videotron has added 402,600 subscriber connections to its mobile telephony service since it was launched in September 2010.
• Videotron’s operating income up $126.2 million (11.5%) in 2012 and average monthly revenue per user (“ARPU”) up $8.29 (8.0%) to $111.57.
• Quebecor optimized its capital structure in 2012 through transactions aimed at creating value for shareholders, including extension of debt maturities by means of financing at more advantageous interest rates and the repurchase of part of CDP Capital’s interest in Quebecor Media, increasing the Corporation’s interest from 54.7% to 75.4%.
• A 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, reflected continuing weak market conditions in the newspaper and music industries.
   

Fourth quarter 2012

• Revenues down $5.6 million (-0.5%) from the fourth quarter of 2011 to $1.14 billion.
• Operating income up $1.6 million (0.4%) to $370.8 million. Videotron’s operating income up $15.7 million (5.3%).
• Net income attributable to shareholders: $9.2 million ($0.15 per basic share), down $76.2 million ($1.19 per basic share) from $85.4 million ($1.34 per basic share) in the fourth quarter of 2011.
• Adjusted income from continuing operations: $56.0 million in the fourth quarter of 2012 ($0.89 per basic share), up $0.4 million ($0.02 per basic share) from $55.6 million ($0.87 per basic share) in the same quarter of 2011.
• Videotron’s revenue generating units up 59,400 in fourth quarter 2012, also the largest increase among Canadian cable operators.
• On November 13, 2012, Sun Media Corporation announced new restructuring initiatives designed to streamline its organizational structure to support better execution of business processes while improving cost effectiveness. These initiatives are expected to yield total annual savings exceeding $45.0 million.
   

 

Quebecor’s results for the 2012 financial year reflect the reliability of the investment strategy we have been pursuing in recent years, primarily entailing capital expenditures for mobile telephony, modernizing Videotron’s network, and developing attractive new products, including illico TV new generation, which was launched in 2012,” said Pierre Karl Péladeau, President and Chief Executive Officer of Quebecor. “Despite continuing strong competition in most of its lines of business, the Corporation ended 2012 with a revenue increase of 3.5% compared with 2011, and an operating income increase of 4.6%. The Telecommunications segment continued to be a powerful driver of growth.

“Videotron had a solid year in 2012,” said Robert Dépatie, President and Chief Executive Officer of Videotron. “Revenues were up for all of our main services, generating overall revenue growth of 8.4% in the segment. Operating income grew by $126.2 million, an 11.5% increase over the previous year. Videotron recorded a net increase of 221,800 revenue generating units and an $8.29 or 8.0% increase in average monthly revenue per user, compared with 2011. Subscriber additions to the mobile network launched in September 2010, which totalled 154,500 in 2011 and 112,000 in 2012, contributed to the customer growth and the increase in profitability. Meanwhile, the cable Internet access and cable telephony services added 55,200 and 59,600 customers respectively in 2012, and the illico TV new generation service passed the half-million subscriber mark, reflecting the success of our business strategy based on marketing bundled services and satisfying customer needs with respect to product development and service quality.
 

“Also, at the end of February 2013, Videotron launched illico Club Unlimited, a new subscription video on demand service that carries the largest selection of unlimited on-demand French-language titles in Canada. It is a product developed by Quebecers to meet customer needs, in keeping with Videotron’s commitment to continuously improve the customer experience it provides.”
 

“The News Media segment’s results were down significantly in 2012 compared with the previous year,” said Pierre Karl Péladeau. “The upheavals in the traditional print media industry, combined with a stagnant economy, negatively affected the profitability of our publications. The impact of the investments made to generate new revenue streams and the large fixed component of the segment’s operating costs were also important factors. The News Media segment needs to adapt its business model and streamline its cost structure. To continue meeting this challenge, the segment launched another reorganization of its newsgathering, editorial, advertising and industrial operations in 2012, with the goal of streamlining its organizational structures and accelerating decision‑making. The organizational changes are expected to yield estimated annual savings of $45.0 million.”
 

In the Broadcasting segment, some of TVA Group Inc.’s (“TVA Group”) hit shows, such as the 2012 edition of Star Académie and the new show La Voix, which has been on the air since the beginning of 2013, have posted exceptional ratings and market shares, with average audiences of 2.2 million for the weekly Star Académie galas and 2.7 million for the weekly La Voix specials, and market shares of 54.5% and 57.5% respectively, demonstrating once again the success of Quebecor’s convergence strategy in creating value‑added multiplatform content around high-quality television products for the benefit of all of Quebecor’s media properties.
 

Jean-François Pruneau, Chief Financial Officer of Quebecor, noted that no summary of Quebecor’s 2012 highlights would be complete without mentioning a major financial event: the repurchase of part of CDP Capital’s interest in Quebecor Media for $1.50 billion. “This mutually advantageous transaction increased the Corporation’s interest in Quebecor Media from 54.7% to 75.4%, while respecting the Corporation’s fundamental financial objectives of maintaining a sufficient level of operational and financial flexibility.”
 

For Quebecor, 2012 was therefore a year that saw solid consolidated financial results, one of the largest financial transactions in the Corporation’s history, and continued restructuring and adaptation efforts in all its segments. Quebecor is thus pursuing its goals of growth, profitability, business development, and shareholder value creation.
 

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", "adjusted income from continuing operations" and "ARPU", please refer to the attached PDF file for the complete version of the press release.

 

 

Information:

Jean-François Pruneau
Chief Financial Officer
Quebecor Inc. and Quebecor Media Inc.
jean-francois.pruneau@quebecor.com
514 380-4144
 

Martin Tremblay
Vice President, Public Affairs
Quebecor Media Inc.
martin.tremblay@quebecor.com
514 380-1985