Quebecor World Inc.

Quebecor World Inc.

January 18, 2006 20:53 ET

Quebecor World Recognizes Non-Cash Charge Associated with Goodwill Impairment, Announces Investments in European Platform and Reduction of Quarterly Dividends

MONTREAL, QUEBEC--(CCNMatthews - Jan. 18, 2006) - Quebecor World Inc. (NYSE:IQW)(TSX:IQW.SV) announced today that as part of its annual impairment test required by GAAP, the Company will recognize a non-cash charge in the fourth quarter of $243 million before tax, $232.1 million after tax or $1.77 per share for goodwill impairment. The impairment is primarily related to the Company's operating businesses in France and the United Kingdom. The non-cash charge will not impact Quebecor World's liquidity position and the Company is in compliance with all of its debt covenants.

"Although we are disappointed with our performance in France and the United Kingdom, we remain confident in the European print market and in our ability to serve both our European based customers as well as international publishers and retailers with our full-service continental print platform. After a strategic review of our operations we have begun a European retooling program that will improve our competitive position, lower our cost base and provide better service to our customers," said Pierre Karl Peladeau, President and CEO, Quebecor World Inc.

Quebecor World's three-year European capital investment program will be approximately $250 million of which $87 million was disbursed at the end of 2005. This investment program is in addition to the Company's previously announced North American retooling plan and other regular investments. It involves the purchase of new state-of-the-art technology that will be installed in Quebecor World's offset and roto-gravure facilities in Belgium, Spain and Austria.

The new equipment will include two new 4.3 metre gravure presses in Charleroi, Belgium. These gravure presses will be the largest in Europe. The first press is expected to be operational in the fourth quarter of 2006. The plan also includes wider and faster 64-page offset presses for Quebecor World facilities in Austria and Spain. These new 64-page offset presses will be equipped with the latest technology to deliver greater throughput at a lower cost. Quebecor World is considering investments in France, including two new 64-page presses in its Mary-sur-Marne facility, as well as investments in the United Kingdom as part of this $250 million capital investment program, but those investments are conditional on the outcome of negotiations with employee representatives that are already underway.

"Following the model of our North American retooling program, we are making these investments where they can bring the most benefit to our customers and to our shareholders," commented Mr. Peladeau. "These investments, combined with our North American plan, will require a short-term increase in our capital expenditures. We are convinced these measures are in the best long-term interests of all our stakeholders."

Taking into account the current capital spending program, the Board of Directors has approved a reduction of the quarterly dividend on the Multiple Voting Shares and Subordinate Voting Shares to $0.10 per share from $0.14 per share. This will lower dividend payments by $21 million per year so these funds can be used to build better long-term value for shareholders.

As previously disclosed at the beginning of the fourth quarter, Quebecor World expects fourth quarter diluted earnings per share, before impairment of assets restructuring and other charges, to be lower than last year and below market expectations. Quebecor World will report fourth quarter and full-year earnings for 2005 on February 16, 2006.

Forward looking statements

The statements in this press release that are not historical facts are forward-looking statements and are subject to important known and unknown risks, uncertainties and assumptions which could cause the Company's actual results for future periods to differ materially from those set forth in the forward-looking statements. Certain factors that may cause actual results to differ from current expectations include seasonality (including seasonal fluctuations in customer orders), operational risks (including changes in customer demand for the Company's products and pricing actions by competitors), risks associated with capital investments, environmental risks, risks relating to labour agreements, commodity risks (including changes in raw material and equipment costs and availability), credit risks, financial risks, and general changes in the economic environment. Investors and others are cautioned that the foregoing list of factors that may affect future results is not exhaustive and that undue reliance should not be placed on any forward looking statements. For more information on the risks, uncertainties and assumptions that could cause the Company's actual results to differ from current expectations, please refer to the Company's public filings available at and including, in particular, the "Risks and Uncertainties" section of the Company's Management's Discussion and Analysis for the year ended December 31, 2004, and updated information found in the Company's quarterly management's discussion and analysis.

About Quebecor World

Quebecor World Inc. (NYSE:IQW)(TSX:IQW.SV) is one of the largest commercial printers in the world. It is a market leader in most of its major product categories which include magazines, inserts and circulars, books, catalogs, direct mail, directories, digital pre-media, logistics, mail list technologies and other value added services. Quebecor World has approximately 32,000 employees working in more than 130 printing and related facilities in the United States, Canada, Argentina, Austria, Belgium, Brazil, Chile, Colombia, Finland, France, India, Mexico, Peru, Spain, Sweden, Switzerland and the United Kingdom.

Contact Information

  • Quebecor World Inc.
    Tony Ross
    Director, Communications
    (514) 877-5317 or (800) 567-7070
    Quebecor World Inc.
    Philippe Cloutier
    Director, Finance and Investor Relations
    (514) 877-5147 or (800) 567-7070