Losses per share from continuing operations in the first quarter were $0.04 compared with diluted earnings per share of $0.05 in 2005.
Diluted earnings per share from continuing operations before impairment of assets, restructuring and other charges were $0.09 compared with $0.27 in the first quarter of 2005.
Operating income before IAROC also slumped in the first quarter, down 44 per cent to $49.6m compared with $88.6m in the same period last year. Consolidated revenues for the quarter were 5.38 per cent lower at $1,468b compared with $1.551b in the first quarter of 2005.
Quebecor World’s first quarter results continue to reflect a challenging market environment highlighted by negative price pressures, changing product mix for many print services and higher energy costs compared with the same period in 2005.
The company is focussed on completing its investment program that involves installing new wide-web presses in its North American and European platforms. Once installed, this new technology will deliver greater page throughput at lower costs creating a more efficient manufacturing platform.
Several of the new presses were installed in the fourth quarter of 2005 and their performance is steadily improving. However overall, first quarter results were offset by the second and most significant phase of the retooling plan that began in the first quarter and will continue throughout much of 2006.
“As we indicated in our year-end results, 2006 will be a transition year for Quebecor World. This year we are experiencing the full impact of previously announced contract expirations in some of our businesses while new contract wins will only enter our platform in the later part of this year and in 2007,” says Pierre Karl Peladeau, president and CEO, Quebecor World Inc.
“Along with the installation of our new equipment we are continuing to improve the productivity of our global platform through restructuring. This plan will strategically position our assets where they can most effectively serve the needs of our customers as they develop print programs to meet the challenges of today’s marketplace.”
Volumes in North America were essentially flat compared with the first quarter last year. Volumes increased in the catalogue and book segments, they were flat in retail and lower in magazine, direct, directory and in Canada. Margins in the US were also adversely affected by unfavourable price/mix in several segments.
In Europe, volume declined compared with the first quarter of 2005 due to the full impact of the loss of a customer in the UK and the sale of five French facilities.
In the first quarter, impairment of assets, restructuring and other charges were $22m compared with $33m in the first quarter of 2006. The first quarter restructuring initiatives will result in the reduction of 756 employee positions.
These initiatives include previously announced workforce reductions at the Brookfield, WI facility and reductions at other facilities across the Company’s global platform.
Second quarter and third quarter restructuring initiatives will include workforce reductions as a result of the closure of our book facility in Kingsport, TN and our facility in Strasbourg, FR.
These and other ongoing initiatives will enable the Company to operate more efficiently by reducing costs and by reassigning selected assets to larger more specialized facilities.
Quebecor World recorded free cash flow in the first quarter of $5 million. This is an improvement of $85 million over last year due in part to $27 million from the previously announced sale of certain assets.
Directors have declared a dividend of $0.10 a share on Multiple Voting Shares and Subordinate Voting Shares. The Board also declared a dividend of CDN$0.3845 a share on Series 3 Preferred Shares and CDN$0.43125 on Series 5 Preferred Shares. The dividends are payable on June 1, 2006 to shareholders registered with the company at the close of business on May 23, 2006.
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