May 12, 2010 / 11:29 AM / 8 years ago

Quebecor operating profit lifted by telecom unit

OTTAWA (Reuters) - Media and communications conglomerate Quebecor Inc posted a 9 percent rise in first-quarter operating earnings on Wednesday, driven by telecoms gains and cost cutting in its news media unit.

<p>Quebecor Inc. President and CEO Pierre Karl Peladeau (R) talks with Chairman Jean Neveu at the company's annual shareholders meeting in Montreal, May 12, 2010. REUTERS/Shaun Best</p>

Quebecor, which controls the Videotron cable company and the Sun Media chain of newspapers, also said it was pressing ahead with wireless network build-out and reaffirmed that it plans to launch service this summer.

Canaccord Genuity analyst Dvai Ghose said the quarterly results were strong, but earnings per share lagged expectations, due to a non-cash options expense that reflects share price gains.

“I think the results overall are very, very solid. People expect good results from the cable asset and there was very good subscriber growth, very good revenue growth,” Ghose said.

The news media unit, which showed signs of recovery in the previous quarter after nearly two years of poor results, also made gains, the analyst said.

The Montreal-based company said earnings from continuing operations, excluding one-time items, rose to C$46.8 million, or 73 Canadian cents per share, from C$43.1 million, or 67 Canadian cents per share, a year earlier.

Analysts, on average, had expected earnings of 78.5 Canadian cents a share on that basis, according to Thomson Reuters I/B/E/S and revenue of C$932.6 million.

Including charges for stock-option expenses and other one-time items, net income fell to C$38.3 million, or 60 Canadian cents per share, from C$57.7 million, or 90 Canadian cents a share.

Revenue rose 5 percent to C$948.1 million.

The telecoms segment, which saw a 12.6 percent rise in operating income, recorded 29,000 new cable phone customers, 21,000 cable Internet access users and 8,500 cable TV customers.

The company generated an additional C$17 million in first-quarter savings over last year from its new media restructuring. Total annual savings are now estimated at C$83 million.

Class B shares of Quebecor gained 35 Canadian cents, or about 1 percent, to C$36.86 on the Toronto Stock Exchange in early trading on Wednesday.

($1= $1.015 Canadian)

Reporting by Susan Taylor, with additional reporting by Euan Rocha in Toronto; Editing by Lisa Von Ahn and Maureen Bavdek

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