Quebecor World to Cut Staff & Close Facilities

MONTREAL—Quebecor World Inc. reported that it will cut 6% of its work force, close seven of its 160 plants, and take a $225 million pretax restructuring charge in its fourth quarter. The plant closings and staff cuts are expected to improve annualized pretax earnings by approximately $45 million.

The company, which reports annual sales of $6.5 billion, says these actions are in response to the disruption of business caused by the September 11 terrorist attacks on the United States, a slowing demand for printed products in the U.S. and Europe, and a significant drop in advertising spending.

"Although printing has historically proven to be recession resistant, we are not immune to the economic consequences of these horrific acts, especially when typically 50% of our net income is earned in the last four months of the year," explains Charles G. Cavell, president and chief executive of Quebecor World.

He adds, "We will aggressively protect our industry-leading margins on the work available to us, and management will be proactive in reducing costs and increasing efficiencies in this period of reduced volume."

He notes that the attacks weakened consumer confidence, causing publishing and retail customers to cancel or reduce print orders. In light of negative market conditions and a poor economic outlook, Cavell says that his management team is evaluating aggressive cost controls and operational improvements across the company.

"We learned a great deal about the effective use of scale during the process of integrating the Quebecor Printing and World Color printing platforms over the past two years," adds Cavell.

"We will apply those lessons during this exercise to realize even greater efficiencies. The redeployment of assets into larger and more efficient facilities will have the added benefit of reducing fixed costs, while retaining production capacity to be available when the economy rebounds."

He continues, "Quebecor World has faced tough times before and has come out stronger. I am confident our product mix, geographic diversification, employee base, and strong management team make us uniquely positioned to continue our historic strong compound annual growth rate when demand and market conditions improve. These continuing cost and operational initiatives will better serve our customers and improve returns for our shareholders."

More than 30% of Quebecor World's revenues are generated outside of the U.S.