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Quebecor beats Street despite near 10% drop in Q2 profit

Published: 15:16 10 Aug 2011 EDT

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Quebecor (TSE:QBR) announced Wednesday its second quarter profits slipped nearly 10% as costs rose, but still managed to top estimates by a wide margin.

For the three months ending June 30, the holding company, which owns Quebecor Media, posted net income of $55.2 million, or $0.85 per share, down 9.2% from $60.8 million, or $0.93 per share, a year ago.

On an adjusted basis, excluding a $29.9 million increase in amortization charges, and a $7.9 million rise in restructuring charges, as well as other items, net income from continuing operations was $60.0 million, or $0.93 per basic share, down 4.6% from $62.9 million, or $0.98 per basic share, in the year-ago period.

Revenues rose to over $1.05 billion, up 6% over the same period last year.

Analysts had anticipated earnings of 83 cents, on revenues of $1.0 billion.

“Attesting to the success of the Corporation’s investment and development strategy, revenues grew in all business segments despite aggressive competition in many of those segments," said president and CEO, Pierre Karl Péladeau.

Indeed, revenues from its telecommunications segment, which includes Quebecor's subsidiary, Videotron, rose 9.7% to $601.1 million.

Engaged in cable broadcasting, internet access, and cable and wireless telephone service, Videotron's customer base rose 75% more than it did in the year ago period, to 4.42 million, adding nearly 46,000 subscribers to its mobile services network. However, the company paid C$482 per wireless subscriber addition in the quarter, it said, while the roll-out of its mobile network contributed to an 8% increase in operating expenses.

Quebecor's news media segment, including Sun Media Corp and a slew of daily newspapers catering to communities outside the GTA, posted revenues of $267.5 million, up 0.3%. The broadcasting unit, which includes television stations like TVA and Sun TV, saw sales rise 6% to $117.5 million.

"Several contracts were finalized during the second quarter of 2011, including a contract between Quebecor Media Printing Inc. and The Jean Coutu Group (PJC) Inc. and one between the QMI National Sales Office and Omnicom Group Inc.," Péladeau added.

"While the spending is impacting the segment’s financial results for now, it is essential to our long term growth."

The company also acquired the Montreal Junior Hockey Club, with intentions to move it to Blainville Boisbriand, a northern suburb of Montréal, Québec. Quebecor said the purchase will give it access to content for the upcoming launch of TVA Sports in the early fall of 2011.

Based in Montreal, Quebec, Quebecor's stock on the Toronto Stock Exchange rose 6.69% to trade at $30.14 per share as of 1:38 pm EDT.

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