SALES REVENUES AT €136.4MN (€135.9MN ON 2016)
NET RESULT AT €5.0MN (€5.5MN ON 2016)
NET FINANCIAL POSITION POSITIVE FOR €29.0MN
Rome, April 27 2017 – The Board of Directors of Gruppo Editoriale l’Espresso S.p.A. met today in Rome under the chairmanship of Mr Carlo De Benedetti and approved the consolidated results as of March 31 2017 presented by Chief Executive Officer Monica Mondardini.
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FOREWORD
On July 30 2016 the Espresso Group and ITEDI, following the memorandum of understanding signed on March 2 2016, signed a general agreement to merge the two companies in order to create the leading publishing Group in Italy and one of the main groups in Europe in the sector of daily and digital news. As part of the deconsolidation plan aimed at ensuring compliance with the print run thresholds set out in current regulations, in view of the future merger with La Stampa and Il Secolo XIX, during 2016 the Espresso Group completed the following transactions:
- the sale on October 28 2016 of the entire shareholding interest of 71% in Seta SpA, publisher of the titles Alto Adige and Il Trentino;
- the sale on November 1 2016 of the business arm including the newspapers Il Centro, and its printing centre, and La Città di Salerno;
- the lease from December 1 2016 of the business arm including the newspaper “La Nuova Sardegna” to the company DB Information SpA.
The advertising for all the newspapers has remained with the sales advertising company A.Manzoni&C. To ensure that the figures are comparable, a pro-forma income statement was prepared for the first quarter of 2016 giving the results with the current consolidation perimeter, i.e. for the 5 titles that have been deconsolidated, taking into account only the revenues and costs of the concessionaire. Later in this press release the comparisons with the previous year refer to the pro-forma figures.
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PERFORMANCE OF THE MARKET
After the slight recovery in 2016, in the first two months of 2017 advertising investment underwent a decline of 2.3% compared to the corresponding period of 2016 (Nielsen Media Research figures). The decline affected all of the media, but with a different intensity: whereas television and radio received orders for an almost equivalent amount as in the same period of 2016 (-0.5% and -0.3% respectively), the internet (excluding search and social) reported a decline of 2.9% and the printed press was down by 8.6% with daily newspapers posting -9.7% (-10.9% for national advertising and -9.1% for local advertising) and magazines -6.4%. As far as newspaper circulation is concerned, according to ADS (Accertamento Diffusione Stampa) figures, in the first two months of 2017 there was a fall in sales on the newsstands and in subscription of 9.3%.
PERFORMANCE OF OPERATIONS OF THE ESPRESSO GROUP IN THE FIRST QUARTER OF 2017
The Group closed the first quarter of 2017 with a positive net result of €5.0mn. Consolidated revenues, amounting to €136.4mn, were up by 0.4% on the first quarter of 2016 (-3.1% on a non like-for-like basis). Circulation revenues, amounting to €42.3mn, were down by 4.6% from the same period of last year on a like-for-like basis in a market that, as stated above, has continued to see a significant reduction in the circulation of newspapers. Advertising revenues were up by 6.8%, posting a decline of 6.6% for the Group media and a significant increase in third-party concessions, thanks to the new concessions of Radio Italia, La Stampa and Il Secolo XIX, for national advertising. For the Group media, radio advertising orders rose by 1.5%, confirming the positive trend already seen in the previous year. Internet orders underwent a slight decline (-1.5%) that was less than the market decline. Lastly, the printed press reported a significant fall (-10.4%), reflecting the negative performance of the newspaper and magazine market, which particularly affected the national press, while local papers held up well. Costs fell by 6.4% which affected both fixed personnel costs (-5.4%) and other costs (-7.2%). The consolidated gross operating margin came in at €13.1mn (€12.3mn in the first quarter of 2016 pro-forma). The consolidated operating margin came to €9.7mn (€8.8mn in the same period of last year pro-forma). The consolidated net result was €5.0mn, versus €5.5mn in the first quarter of 2016 proforma. The net financial position at the end of March 2017 was a positive €29.0mn, compared to €31.7mn at year end 2016 and €15.5mn at March 31 2016. The Group had 1,946 employees, including temporary contracts, at the end of March and the average number of employees in the period was 2.3% lower on a like-for-like basis than in the first quarter of 2016.
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MAIN EVENTS THAT HAVE OCCURRED SINCE THE CLOSE OF THE FIRST QUARTER AND OUTLOOK FOR THE REST OF THE YEAR
In the early months of 2017 the conditions for implementation of the merger of the Espresso Group with ITEDI, submitted today to the approval of the Annual General Meeting of the Shareholders of the Espresso Group, were fulfilled positively. More specifically, on March 9 2017 the AGCM authorized the deal, subject to certain corrective measures being put in place and these have today been adopted by the Group. Moreover, on March 17 2017 the AGCOM published the newspaper print run figures in Italy for the year 2016, which showed that the merger of the Espresso Group with ITEDI does not give them a dominant position in the newspaper market. As far as the prospects for financial year 2017 are concerned, based on the performance of the first quarter, there are no signs of an improvement in the trends that have been affecting the sector for some years; to counter these trends, the Group is continuing to engage in the development of its digital business, in which it is a leader in its sector, and in reducing costs. The merger with ITEDI will open up new opportunities on both of these fronts.
