Arnoldo Mondadori Editore S.p.A. · MIL:MN
Arnoldo Mondadori Editore — Mondadori Group — Q1 2011 Earnings Presentation
52 slides from Arnoldo Mondadori Editore's earnings presentation, May 2011
Slide 1: Mondadori Group Investors' Presentation 1Q 2011 Results
Mondadori Group Investors’ Presentation 1Q 2011 Results Segrate, May 20111
Slide 2: Highlights 1Q 2011
Highlights 1Q 2011 In In aa quarter quarter marked marked byby disappointing disappointing economic economic data data (contracting (contracting productivity, productivity, high high unemployment unemployment rate rate and and declining declining consumer consumer confidence), confidence), Mondadori
Slide 3: Profit and Loss Q1-2011
Profit and Loss Q1-2011 a Revenues 344.7 355.6 3.2% Labor costs (66.9) (68.5) 2.4% Cost of sales & other (256.6) (265.3) 3.4% EBITDA 21.2 21.8 2.8% Depreciation (5.5) (5.5) - EBIT 15.7 16.3 3.8% Financial charges (7.1) (5.4) (23.9%) Profit before taxes 8.6 10.9 26.7% Taxes (6.0) (5.7) (5.0%) Minorit
Slide 4: NFP and covenants evolution
NFP and covenants evolution In Q1 2011 NFP improved by €21.7m to €320.7m In 2008-2011 period (36 months rolling) total reduction was around €250m 680.1 714.5 518.3 473.9 535.3 566.8 393.0 NFP 454.2 372.9 342.4 416.9 369.0 320.7 358.2 3.26 2.30 2.71 2.22 3.51 2.44 2.82 3.16 2.29 2.62 2.83 covenant 2.
Slide 5: Headcounts and cost saving plan evolution
Headcounts and cost saving plan evolution Headcounts: -178 - Reduction of 178 units compared with 3,852 * Q1 10, including the consolidation of 3,649 3,674 Mondolibri - Increase of 25 units compared to FY 2010 due to the ongoing development of the new digital activities Operating Costs: reached the
Slide 6: Books: market highlights
Books: market highlights Market: slight decrease in value (-0.1%) compared with Q1 10 Leadership confirmed with 26.1% market share (in line with Q 1 10) e-book market still to be developed awaiting for the opening of the “e- stores” of major international players (Amazon, Apple, Google) e-book Catal
Slide 7: Books: financial highlights
Books: financial highlights Trade revenues +0.5%, (78% of total divisional revenues) while total books revenues were down by (-2.3%), due to a slump in Art & Exhibition (-17%) and third parties distribution (- 9%); Educational remained flat compared with the same period 2010 In March a new brand in
Slide 8: Magazine Italy: market highlights
Magazine Italy: market highlights Circulation Circulation market market (copies) (copies) ** -7.5% -7.5% Altri Circulation Circulation Mondadori Mondadori 15.2% Mondadori -6.4% -6.4% 36.8% (copies) (copies) Espresso 3.4% Advertising Advertising Magazine Magazine -4.3% -4.3% Condè Nast 4.0% (value)*
Slide 9: Magazine Italy: financial highlights
Magazine Italy: financial highlights Revenues -1.1% with the following mix : - Advertising +4.8% thanks to the good performance of Mondadori Magazines (+3.0%) and a marked increase of internet and international activities - Circulation -5.8% while Add on Sales revenues were flat compared with Q1 10
Slide 10: Magazine France: market highlights
Magazine France: market highlights Positive performance confirmed; revenues +1.9%: - Strong upswing in advertising (+10.2%) thanks to Grazia and other women’s title, which now represent 32.5% of total revenues (24.6% in Q1 10) - Circulation +0,5% (71% of total revenues). All women’s magazines (BiBa,
Slide 11: Advertising: market highlights
Advertising: market highlights Total advertising market -2.0% in the first two months of 2011 due to a slowdown in TV (60% of total market); internet +15.5% confirming the growing trend while newspapers and magazines still negative (-4.3%) Best segment performance in Q1 11 was recorded by cosmetics,
Slide 12: Advertising: financial highlights
Advertising: financial highlights 0.2% Revenues stable to €49.5m compared with Q1 10, in details: 49.4 49.5 Mondadori Advertising +3% with: Others 5.5 4.8 Radio 6.1 5.8 - Weeklies : +5.6% with strong performance of Grazia and TuStyle (after Magazine 4.9 5.0 Third parties the re-launch) - Monthlies:
Slide 13: Direct & Retail: financial highlights
Direct & Retail: financial highlights +24.2% Revenues +24.2% compared with Q1 10 thanks to the consolidation of Mondolibri 61.5 (May 2010) and franchising network (+5%). Others 1.8 Mondadori Multicenter signed agreement for 49.5 12.7 with leading brands for in-store corner Direct 5.1 development The
Slide 14: Radio: financial highlights
Radio: financial highlights Advertising market declined by -5% compared to Q1 10 (source FCP Assoradio) National data on listeners not yet available 4.4 from Audiradio 4.4 R101: - Ongoimg digital development (5 Web thematic stations available) - Presence on major social network like Facebook, Twitte
Slide 15: Digital: financial highlights
Digital: financial highlights Digital business includes: 1) Digital Activities: E-commerce: - Bol.it: 835.000 unique users (+14% vs Q1 10) Revenues Revenues €4.4m €4.4m - Easy Shop.it: web site launched in March EBITDA: €3m EBITDA: €3m CRM: system to gather clients data for profiling Gaming: request
Slide 16: 1Q 2011 Annexes
1Q 2011 Annexes Annexes 16
Slide 17: Net Debt Evolution
Net Debt Evolution (€ million) Net Debt Cash Flow Working Taxes Investiments Severance Net Debt FY 2010 Capital/ other Funds Q1-11 17
Slide 18: Results Breakdown by division
Results Breakdown by division * Net Revenues 18
Slide 19: Three years plan overview
Three years plan overview 19
Slide 20: Our Goals … our Strengths
Our Goals … our Strengths Confirm Mondadori’s leadership in its reference markets continuously improving quality and product innovation Develop a business model focused on continuous expansion of its core business, based on coherent diversification with, in line with the Mondadori approach Consolida
Slide 21: Our Goals … our Strengths
Our Goals … our Strenghts … a solid financial position recorded in 2009 and consolidated in 2010 IN preparation for: - Develop a consistent dividend policy over time - Take advantage of the consolidation process in both traditional and digital businesses 21
Slide 22: Books
BOOKS 22
Slide 23: Books: Actions
Books: Actions Confirm our leadership in Italy with a 27-30% market share both in paper books andBOOKS in ebooks where Mondadori is a first mover (Telecom Italia, Google, etc) Reliable and extensive talent scouting (almost all authors have signed agreements for both paper and digital rights) Re-bala
Slide 24: Books: market evolution
Books: market evolution % on total CAGR 0,9% CAGR 2,7% Source: IDPF, Cefriel, AIE Editech 24
Slide 25: Cost Structure evolution
Cost Structure evolution Cover Cover Cover MAGAZINEAvg. IT Price 20 € Avg. Price 12 € Avg. Price 12 € Author 11% 20% Production 8% 31% Author Marketing 3% 2% 2% 5% Distribution 2% Inventory 1% Production 3% Marketing Retail 39% 42% 20+10% Retail Returns 20% 31% 35% Publisher Publisher 15% 25
Slide 26: Books: Targets
Books: Targets Sales to grow in line with market trend (increasing weight of trade books) BOOKS Education is expected to recover from 2013 thanks to the new adoptions e-book contribution will gradually pick up reaching 7-10% of total sales Profitability is expected to remain high thanks to: − Confir
Slide 27: Magazine Italy
BOOKS MAGAZINE ITALY 27
Slide 28: Italian Magazine Portfolio (1/2)
Italian Magazine Portfolio (1/2) 35% market share, 35 magazines 3,1 Mio. copies sold weekly, 2,8 monthly, 192 million yearly 17,6 Mio. weeklies readers, 16 million monthlies readers One out of 2 Italians reads a Mondadori magazine every week o months Mondadori publishes the best seller and the most
Slide 29: Italian Magazine Portfolio (2/2)
Italian Magazine Portfolio (2/2) Tv guides Leader TV Sorrisi e canzoni, Tele+, Guida TV, Weeklies women Leader Donna Moderna, Chi Grazia, Tu Style, Confidenze Newsmagazines Leader Panorama Science Leader Focus Interior decoration Leader Casaviva, Casa Facile, G Casa, Interni, Casabella, Ville & Giar
Slide 30: Magazine & Advertising Italy: Actions
Magazine & Advertising Italy: Actions Confirm: − Market leadership in weekly magazines (80% of total) − “Best in class” in adds on sale increasing market share − No magazines with negative profitability Renewal/ repositioning of all existing magazines without significant investments Develop synergie
Slide 31: Magazine & Advertising Italy
Magazine & Advertising Italy Advertising Uncertainties but sign Stable rates. Recovery expected of improvement over time MAGAZINE IT Circulation Limited decline Product reshaping Adds on sale Structural decline 40% market share Focus on home video, music, book and gadgets Leverage on existing relati
Slide 32: Magazine & Advertising Italy
Magazine & Advertising Italy MAGAZINE IT Sales to grow in line with market trend Adds on sales decline below market expectations Break even of digital activities Profitability expected to improve thanks to cost controls 32
Slide 33: Digital
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Slide 34: Digital Division Goals
Digital Division Goals − Increase, through customer knowledge and intelligence, the company’s ARPU − N. 1 in female digital segment − N. 1 in digital cultural consumption − N. 1 in tablet specific products − Enter new areas arising from customer intelligence 34
Slide 35: Customer at the center
Customer at the center Building the customers’ narrative MAGAZINES EDUCATION DIGITAL BOOKS RETAIL Data Info Data Info Data Info Data Info Data Info Business Intelligence CRM Customer Database 35
Slide 36: How to increase ARPU
How to increase ARPU Increasing the number of € interactions with the € customer € Increase the € amount of time spent in each interaction € € Increase the depth of interaction to gather more € € data 36
Slide 37: To grow Mondadori digital activities
To grow Mondadori digital activities The peculiarity of the Italian digital landscape In 2010, 70% of Italians used Internet (65% from home), only 30% on daily basis +44% users from mobile/smart phone/IPAD (13% of population) Only 30% had broad band from home. As of today around 600k IPAD sold in It
Slide 38: N. 1 in female digital segment
N. 1 in female digital segment Develop a segmented, international offer aimed at our female customers using the breadth of our properties; Launch or Relaunches : − New Grazia − Relaunch Donna Moderna − New video cooking channel − Relaunch Cosmopolitan − Tustyle as social brand − Introduce high stree
Slide 39: N. 1 in digital cultural consumption
N. 1 in digital cultural consumption Transforming BOL from an online shop to an online cultural consumption experience New editorial contents, social engagement and live events THE ITALIAN Enrich product categories (digital movies, CULTURAL ticketing) CONSUMPTION Stimulating users in displaying cult
Slide 40: N. 1 in Apps development
N. 1 in Apps development Adding new distribution platforms (Android and Samsung TV) Build on serial approach for apps: − Virtual History: Rome (already on sale: as of March 11.900 downloads), Venice, Florence, Milan, and “il Cenacolo” − Collectibles: Soldiers, Paintings and Personalities − Cooking −
Slide 41: Financial goals
Financial goals Rapid organic growth to reach Digital Division break-even in 2013 Rapid organic growth to reach cruising speed in 5 years producing at least 15% on Group revenue and... Evaluate accelerating organic growth through acquisitions in the years 2011-2013 41
Slide 42: International
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Slide 43: Mondadori France
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Slide 44: International businesses: France …4 pillars
International businesses: FRANCE …4 pillars Grazia success as the most innovative and successful launch of the last 15 years − Major driver of the transformation of Mondadori France as: • Revenue growth driver in highly profitable segment (women upscale) • New revenue mix reducing weight of TV Guide
Slide 45: France: targets
France: targets MAGAZINE IT Sales overperforming market trend − increasing contribution of advertising focusing on upscale female segment (Grazia and BIBA to contribute to 35% by 2013 in adv revenues from 27% in 2010) Digital contribution will peak over the period (>5% of total sales) Strong improve
Slide 46: Mondadori International
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Slide 47: International: International Network
International: International Network In only six years the fastest growing network among global players MAGAZINE IT 47
Slide 48: International: Grazia International network
International: Grazia International network 15 editions in the world Total turnover over Euro 100 million Investments in “BRIC” countries. Russia, China, India, already existing, Brazil in 2012 By 2015 additional countries to reach a total of 25 Reinforcing the European footprint (Poland / Spain) De
Slide 49: International: Focus on China
International: Focus on China By 2012 launch of weekly edition of Grazia (currently fortnightly) Exploit the advertising booming market (+12% in 2011) mainly in fashion and cosmetics Distribution development in 2nd tier cities By 2011 launch of Grazia Web site and mobile version Create the “Grazia S
Slide 50: International
International MAGAZINE IT Further strong growth of sales Maintaining the current profitability (59%) in licensing Positive EBITDA of Russia and China JVs by end of 2012 50
Slide 51: Disclaimer
Disclaimer Certain statements contained herein may be statements of future expectations and other forward-looking statements based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ mate
Slide 52: Forthcoming events
Forthcoming events 27 July 2011 H1-11 Results 10 November 2011 9M-11 Results Dario Dario Fumagalli Fumagalli Head Head ofof Investors Investors Relation Relation Tel. Tel. +39 +39 0202 7542.3695 7542.3695 Mobile Mobile +39 +39 3355638019 3355638019 e.Mail e.Mail [email protected] dario.fu