Quebecor Inc. CEO Pierre Dion arrives at the company's annual general meeting in Montreal, Thursday, June 19, 2014.Graham Hughes/The Canadian Press
Quebecor Inc.'s wireless business continued to drive growth at the company in the second quarter amid declining cable television subscribers and a rough period for its media division.
The Montreal-based company reported results largely in line with analyst expectations on Thursday, posting total revenue of $993-million, up 3 per cent from the same period last year.
Its profit in the quarter was $9.8-million, compared with $72.1-million last year, which the company attributed to losses on financial instruments. On an adjusted basis, it earned 57 cents per share, ahead of the consensus analyst forecast of 51 cents per share.
Sales growth was led by the telecom business, which saw a 5.2-per-cent increase in revenue to $780.4-million.
"Wireless services continue to lead the charge for us," Manon Brouillette, chief executive officer of the company's Videotron division, said in a call with analysts.
Videotron attracted 33,000 new wireless subscribers in the quarter and now has 829,000 customers, she said. Its average revenue per user (ARPU) was up 7.4 per cent to $50.51 per month.
But Videotron also shed 24,500 cable TV customers and 6,400 Internet subscribers in the second quarter, which Ms. Brouillette said is traditionally weaker for the company because of the end of the school year and the traditional Quebec moving day of July 1. She added that the company has already seen better than usual reconnections in July.
Meanwhile, revenue at Quebecor's media business, which includes broadcast and newspaper assets, were down about 9 per cent to $229.2-million.
Quebecor chief executive officer Pierre Dion said the division "suffered from unpredictable events," including the absence of the Montreal Canadiens hockey team from the National Hockey League playoffs and the late cancellation of a major production at the company's movie studio.
"Nonetheless, we are confident those bumps will only be temporary and our investment thesis therefore remains intact," Mr. Dion said.
Aravinda Galappatthige, an analyst with Canaccord Genuity, noted that while the Videotron division's revenue and earnings figures were strong, its cable and TV subscriber numbers were weaker than expected. "Meanwhile, wireless was in line both in terms of revenue growth and subscriber growth," he said.
Quebecor shares were down as much as 4 per cent on Thursday morning after the results were reported. But Desjardins Securities analyst Maher Yaghi suggested that could be because the stock has been on a strong run recently (it is up more than 13 per cent over the past three months).
"We recognize that given the stock's very strong performance lately, some profit-taking could occur, but for long-term investors this should be seen as a potential entry point," he wrote in a note to clients.
"We maintain our view that Quebecor should continue to post mid-single-digit earnings growth due to good momentum in wireless."
Mr. Yaghi added that there are potential "catalysts" to spur further growth – namely the potential sale of wireless airwaves the company owns outside Quebec as well as its repurchase of the remaining interest in its Quebecor Media Inc. subsidiary held by the Caisse de dépôt et placement du Québec – and said that could "suggest continued potential upside in the stock is likely."