Gruppo Editoriale L’Espresso: 1H results


The Board of Directors examines results as of first half of 2011


Espresso Group financial results as of june 30, 2011

Consolidated data (€mn)

First Half 2010

First Half 2011

Delta % 2011/2010

Revenues, of which:




·          circulation




·          advertising




·          others




Gross operating profit




Operating profit




Pre-tax Profit




Net Profit





June 30 2010

December 31 2010

June 30 2011

Net Financial Position




Shareholders’ Equity including minority interests




·          Shareholders’ Equity




·          Minority interests








Rome, July 20, 2011 – The Board of Directors of Gruppo Editoriale L’Espresso S.p.A. met today in Rome under the chairmanship of Carlo De Benedetti, and approved the consolidated financial statements as of the first half of 2011.

Market Outlook
The Italian economy scenario of year 2010, characterized by weak signs of growth and uncertainty over future perspectives, is stretching over year 2011. This framework has reflected over the advertising market that, in the first five months of  year 2011 has recorded a 2.8% decline vis-à-vis the corresponding period of 2010 (Nielsen Media Research). The negative performance has affected all the traditional media: TV has recorded a 2.3% overall negative performance despite the development of digital channels and pay-tv; radio and publishing have decreased respectively by 8.4% and 5%. Definitely bucking the trend, the Internet is the only medium which could realize a sharp increase (+15.6%) again. More specifically, as far as publishing is concerned, daily newspapers sales have recorded a 7% contraction, that is -4% in paid newspapers and a sharp decline in free press; in contrast, the 1.4% decline of periodicals can be considered as a good result, with a slightly positive performance of weeklies. In terms of circulation, ADS data (moving average over 12 months to March 2011, on a like-for-like basis) show a fall in newsstand sales equal to 5.3% for dailies, 1.5% for weeklies and 7.2% for monthlies.

Comments on the espresso group results over the first half of 2011 In spite of the above framework, over the first half of 2011the Espresso Group has recorded a positive performance, with an increase in revenues and financial performance.
The Group’s consolidated revenues amount to €457.4mn, increasing by 2.8% vis-à-vis the first half of 2010 (€445.1mn).
Circulation revenues amount to €170mn, substantially in line with the corresponding period of the previous year (€171.2mn).
The performance of circulation revenues shows that sales of la Repubblica, periodicals and add-on products have confirmed their stability; circulation of local daily newspapers has recorded a weaker performance, still, revenues have benefited from the price increase applied, early in the year, to 7 of the Group’s 18 local titles.
Advertising revenues, equal to €274.4mn, have increased by 3.6% over the first half of 2010, markedly bucking the trend with respect to the critical market  performance.
The Group’s publishing sector has increased by 0.9%, despite the difficulties affecting the whole sector (-5% in May) over the period under consideration; the positive performance has involved all the Group’s titles, the national daily newspaper la Repubblica and all local dailies and periodicals; it could be attained also thanks to the successful renewall in particular of  L’Espresso and of a number of local dailies.  
The Internet advertising has realized a very positive evolution, recording a 15.5% increase, in line with this sector dynamics. After substituting the All Music TV station at the end of year 2009, also DeejayTv, with a 7.7% increase in advertising, has maintained its lively trend and confirmed that this channel repositioning has proved valuable.
Finally, radio advertising sales, including third-party sales,  has recorded a 5.5% decrease, that is lower than the market decline (-8.4%).
Other revenues, equal to €13mn, have increased by 45% with respect to the first half of 2010, thanks to the outcomes of the renting of digital terrestrial television frequency bands to third parties.
Total operating costs have recorded a 1.5% increase, fully ascribable to the development of digital editions and digital terrestrial television network; costs of the traditional core business (publishing and radio), after a 17% reduction realized at December 31, 2010, show a further 0.9% cost-saving, as structural reduction of costs has offset increases in paper costs, postal service, and higher promotion costs aimed at supporting products.
The consolidated Gross Operating Profit amounts to €81.5mn, increasing by 9% vis-à-vis €74.7mn of the first half of 2010.
The consolidated Operating Profit amounts to €63mn, increasing by 11.1% with respect to €56.7mn of the corresponding period of the previous year, and shows profitability equal to 13.8% (12.7% in the first half of 2010). Improvement regards in particular the national publishing sector (la Repubblica and periodicals), thanks to good revenue performance and to a further decline in operating costs, which enabled the absorption of raw material price increase. Moreover, the digital sector contribution is increasing as determined by revenue increase, even if with higher operating costs linked to the products development and promotion.
Local dailies maintain 15% profitability, even if they are recording a slight performance decline due to operating cost increase linked to raw materials prices and full color extension; some new reorganization measures were adopted in the course of the year, aimed at restoring the balance in future.
Finally, as far as radio is concerned, profitability is still over 40%, in spite of a slight operating profit decline ascribable to the weak performance of the advertising market.
The consolidated Net Profit has realized a €31.5mn profit, as compared to €28.6mn of the first half of 2010.
In the first half of 2011, before dividend distribution, net cash flow amounted to €14mn, vis-à-vis €9.3mn of the corresponding period of the previous year (plus €15mn of capital gains from disposal of investments). Taking into account dividends amounting to €29.8mn, the consolidated net financial position, from -€135mn at the end of year 2010, has attained -€150.7mn as of June 30, 2011. The Group staff – including term contracts – at the end of June totaled 2,752 people, and the average staff of the period is 5.9% lower than in the first half of 2010.  ***
Alessandro Alacevich, Central Director of Finance and Administration, Manager in charge of drafting corporate and accounting records, pursuant to subparagraph 2 article 154bis of Testo Unico delle Finanze (Finance Act), states that the accounting information included in this press release corresponds to the documented results, the books and the accounting records. ***

Subsequent events and outlook The first months of 2011 have disclosed again a difficult market situation for the publishing sector, characterized by a fall in advertising, while circulation dynamics are confirming the same erosion suffered over the latest years. For the second half-year, the persistence of a low growth of the economy and of uncertainty over the macro-economic perspectives does not enable to foresee any market performance notably different from the current one. In this framework, as demonstrated by the performance improvement of the first half-year, the Group is going on with the activity aimed at fighting against the unfavorable trend of the reference sector, through a series of interventions to be carried out on the traditional products, development of the digital sector, good dynamics of the concessionaire and uninterrupted attention to cost-saving.
During the first half-year of 2011, a totally new version of L’Espresso was launched; the vast program to renew the Group’s 18 local daily newspapers was launched starting with Il Piccolo and Il Messaggero Veneto, with interventions on formats, graphics, and full color. Finally, the launch of the new edition of Velvet was implemented.
As regards the digital sector development, the new brand “D” site dedicated to the women was launched in the traditional web, while L’Espresso and Velvet were made available on Tablets, in new versions especially conceived for these platforms.
Moreover, consistently with the plan to switch off towards digital terrestrial television, the Group is carrying out a network infrastructure development for its two multiplexes, and the commercialization of the available transmission capacity.
In view of the above, and if the economic scenario does not further deteriorate, at the end of the year the Group should presumably be in a position to register improvements of both revenues and results with respect to the previous year.

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