Quebecor World Announces 1,000 Job Cuts, Sales Losses
MONTREAL—Quebecor World revealed plans to cut 1,000 jobs from its worldwide operations after the company lost $62 million in its second quarter. The loss includes write downs and restructuring charges of $82 million for the quarter. In 2002, Quebecor World had earnings of $64 million in the second quarter.
The restructuring reflects the continued weakness of the printing industry in all of Quebecor World's markets, says Claude Helie, CFO. Helie revealed that three quarters of the affected employees were already gone at the time of the announcement. The majority of the job cuts came from the company's U.S. operations.
The job cuts will cost the company about $26 million, while another $48 million in charges is largely related to the write down of idle and under-performing—partly as a result of the layoffs—assets across Quebecor World's global network. "Fewer jobs meant facilities were unused or underused," Helie notes. "In effect, we are putting our house in order."
Quebecor World estimated the restructuring will result in annual savings of $36 million, of which half will be realized this year. "These challenging economic times demand rigorous financial management at every level of our operations," says CEO Jean Neveu. "The measures we are announcing demonstrate our new management's firm resolve to deal with the current competitive environment while setting a clear course for the future," Neveu adds.
The company's operating income, before impairment of assets, restructuring and other charges, was $45 million for the quarter, compared with $124 million for the same quarter in 2002. Free cash flow rose 80 percent to $72.3 million in the quarter, up from $40 million.
For the first six months, the company posted a loss of $37.2 million, compared with a profit of $110.2 million in the first half of 2002. Revenues rose to $3.03 billion, up from $2.93 billion.