Revenue at €1,361 million, down 12.5% like
for like(1) in the wider context of the Covid-19 health
crisis
Lagardère Publishing reports revenue growth
in the United States
Lagardère Travel Retail down 18% like for
like
The Group is taking firm corrective action
to mitigate the impacts of the crisis
Regulatory News:
LAGARDERE SCA (Paris:MMB):
Revenue fell 12.5% in first-quarter 2020, mainly as a result
of the impacts of the Covid-19 crisis on Lagardère Travel Retail’s
operations from mid-February, and despite a good performance at
Lagardère Publishing for the first two months of the
quarter.
Target scope highlights(2) (like-for-like basis):
- Lagardère Publishing: the drop in revenue (down 3.3%) is
mainly attributable to France following the closure of most points
of sale in the second half of March owing to the health crisis.
However, the business delivered growth in the United States, buoyed
by good momentum in digital formats and by the success of The
Witcher series.
- Lagardère Travel Retail: the decrease in revenue (down
18.0%) for the first quarter was attributable to the impacts of the
Covid-19 pandemic as from mid-February. These were initially felt
in China, where the virus first emerged, and Asia-Pacific, before
spreading to its operations around the world and leading to strict
confinement measures and the gradual closure of many airports and
railway stations, along with an unprecedented collapse in passenger
traffic.
Group revenue totalled €1,361 million versus €1,520
million in first-half 2019, representing a decrease of 10.4% on
a consolidated basis and of 12.5% like for like.
The difference between consolidated and like-for-like revenue is
attributable to a €13 million favourable foreign exchange effect
resulting chiefly from the appreciation of the US dollar and pound
sterling. The €14 million positive scope effect is mainly due to
the acquisition of International Duty Free in Belgium, partly
countered by the disposal of TV channels and digital activities as
part of the Lagardère group’s strategic refocusing.
I. REVENUE AND ACTIVITY BY
DIVISION
Revenue (€m)
Change
Q1 2019
Q1 2020
on a
consolidated
basis
on a like-for-like
basis
Lagardère Publishing
460
457
-0.8%
-3.3%
Lagardère Travel Retail
930
804
-13.5%
-18.0%
Other Activities*
65
60
-7.7%
-6.3%
Target scope
1,455
1,321
-9.2%
-12.8%
Non-retained scope**
65
40
-38.5%
+0.8%
LAGARDÈRE
1,520
1,361
-10.4%
-12.5%
* Lagardère News (Paris Match, Le Journal du Dimanche, Europe 1,
Virgin Radio, RFM and the Elle brand licence), the Entertainment
businesses, the Group Corporate function, and the Lagardère Active
Corporate function, whose costs are being wound down by end
2020.
** Operations disposed of/disposals pending completion
(Lagardère Active), excluding Lagardère Sports, classified as a
discontinued operation in accordance with IFRS 5.
Revenue for first-quarter 2020 totalled €457 million, down
0.8% on a consolidated basis and down 3.3% like for like.
The difference between consolidated and like-for-like revenue is
attributable to a €7 million positive foreign exchange effect
resulting primarily from the appreciation of the US dollar and
pound sterling and, to a lesser extent, a €5 million positive scope
effect linked to the acquisitions of Gigamic and Short Books in
2019.
The figures below are presented on a like-for-like basis.
The 9.4% revenue decline in France
reflects the confinement measures introduced by the French
government in March amid the health crisis. Trade segments
accounted for most of the decline. Distribution activities were
also disrupted, with the moderate proportion of digital operations
failing to offset the sales downturn at brick-and-mortar
stores.
In the United States, the
significant 6.8% increase in business was led by the success of
Andrzej Sapkowski’s The Witcher series (both print and e-book
formats) and by the sharp rise in downloadable audiobooks fuelled
by the success of Malcolm Gladwell’s Talking to Strangers and The
Witcher series. E-books accounted for 16.8% of total US revenue in
first-quarter 2020 versus 17.4% in first-quarter 2019. Downloadable
audiobooks as a percentage of total US revenue increased by almost
4.5 percentage points, to 14.4% in first-quarter 2020 from 10.0%
one year earlier.
Revenue in the United Kingdom
contracted 5.5% owing to a more subdued literary release schedule,
although this was partly countered by the success in all formats of
The Witcher series at Orion. E-books accounted for 17.8% of total
UK revenue in first-quarter 2020 versus 16.8% in first-quarter
2019, while downloadable audiobooks accounted for 6.2% versus 3.8%
in first-quarter 2019.
Revenue in the Spain/Latin America
region slipped 2.3%, as March figures were affected by the state of
emergency and confinement measures introduced in Spain. Mexico saw
slight growth.
Partworks fell 6.1%, hit by a
combination of fewer launches in the quarter, a strong performance
in the comparative first-quarter 2019 period – with successful
titles in Japan and France – and the impacts of the health crisis
in March, which primarily affected sales at newsstands, especially
in France.
E-books accounted for 9.7% of total Lagardère Publishing revenue
in the first quarter of 2020, versus 9.1% in first-half 2019, while
downloadable audiobooks represented 5.9% of revenue compared to
3.8% one year earlier.
Lagardère Travel Retail revenue for first-quarter 2020
totalled €804 million, down 13.5% on a consolidated basis and down
18.0% like for like.
The difference between consolidated and like-for-like data is
attributable to a €6 million positive foreign exchange effect
primarily resulting from the appreciation of the US dollar, and to
a €35 million positive scope effect, due mainly to the acquisition
of International Duty Free in Belgium.
The figures below are presented on a like-for-like
basis.
France saw a 20.7% decline in
business, prompted both by the strikes which continued into the
first few months of 2020, and then by the impacts of the Covid-19
pandemic, with the containment measures introduced by the French
government leading to the rapid shutdown of virtually the entire
network.
The EMEA region (excluding France)
retreated 14.7%, affected by travel restrictions and border
closures introduced as from March in every country in order to halt
the spread of Covid-19.
Revenue was also down in North
America, contracting 15.2% on account of the repercussions
from the Covid-19 pandemic in North America, even though lockdowns
and travel restrictions were introduced later than in the ASPAC and
EMEA regions.
Asia-Pacific, the epicentre of the
pandemic, was the hardest hit geographic area with revenue down
28.0%, the biggest regional decline over the quarter.
First-quarter 2020 revenue for Other Activities came in at
€60 million, down 7.7% on a consolidated basis and down 6.3% like
for like.
The figures below are presented on a like-for-like basis.
Despite a good performance from both press and radio advertising
in the first two months of the year, Lagardère News(3) revenue was down 3.5% over the
quarter, with the impacts of the Covid-19 pandemic taking a heavy
toll on the radio (down 1.5%), press (down 2.8%), and licensing
(down 8.5%) businesses.
First-quarter 2020 revenue for the non-retained scope came in
at €40 million, down 38.5% on a consolidated basis and up 0.8% like
for like.
Lagardère Studios saw a slight 0.8% rise in the first quarter,
buoyed by a good delivery schedule in France and an upbeat start to
the year in distribution, partly offset by an unfavourable
catalogue effect at international subsidiaries.
II. KEY EVENTS SINCE 27 FEBRUARY
2020
13 March: following the new measures taken by the French
government limiting public gatherings and events, the Group
postponed its Investor Day initially planned for 25 March
2020.
25 March: the Group suspended its market guidance and changed
the dividend to be proposed to the Annual General Meeting of 5 May
2020 in light of the Covid-19 pandemic.
7 April: Lagardère cancelled the dividend to be proposed to
the Annual General Meeting of 5 May 2020 and created a Covid
Solidarity Fund for employees.
22 April: Lagardère finalised the sale of Lagardère Sports to
H.I.G. Capital.
III. COVID-19: OUTLOOK AND
LIQUIDITY
Over the first quarter of 2020, the Group experienced a gradual
deterioration in its businesses as the Covid-19 pandemic took hold
and governments across the globe introduced restrictions. Owing to
its exposure to the Asia-Pacific region, the Travel Retail business
was the first to feel the impact and was the hardest hit. Revenue
growth for Lagardère Travel Retail initially slowed to 1.3% over
January-February 2020, with the epidemic mainly affecting the
Asia-Pacific region, before falling 54% in March as the virus
gradually spread across Europe and North America.
Lagardère Publishing was primarily affected as from the second
half of March 2020, when its brick-and-mortar points of sale closed
in Europe and North America following government-imposed
restrictions. After a very good start to the year in
January-February 2020 with 5.6% growth, Lagardère Publishing
revenue fell 19% in March.
Revenue for the Group’s Other Activities edged up 1.4% in the
first two months of the year, but contracted 19% in March due to
the impacts of the health crisis on the advertising market and the
enforced closure of performance venues on the Lagardère Live
Entertainment business.
Lagardère Studios (non-retained scope) was also heavily impacted
from mid-March due to the virtual standstill in production since
confinement measures were introduced in France and Spain.
April 2020 is the first month in which the impacts of the
measures taken by governments to halt the spread of the Covid-19
pandemic will be felt across all of the Lagardère group’s
businesses and over the entire month. Compared to the same period
in 2019, the Group expects April 2020 revenue to be down in the
region of 45% for Lagardère Publishing, 90% for Lagardère Travel
Retail and 40% for Other Activities.
In this context, the Group is continuing to put in place
corrective measures in all of its businesses and at the corporate
level to mitigate the impacts of the Covid-19 pandemic as far as
possible. These include:
- protecting the health of employees, customers and
partners;
- adapting sales and pricing wherever possible;
- systematically reducing costs across all of the Group’s
business in order to curb the impact of the decline in revenue on
operating profit;
- adjusting investment programs and optimising working capital in
order to preserve the Group’s cash resources;
- cancelling the proposed 2019 dividend to be paid in 2020, on
the initiative of Arnaud Lagardère and unanimously approved by the
Supervisory Board;
- reducing the remuneration payable to the Executive Committee by
20% until the summer and for as long as the situation continues, on
the initiative of its members;
- creating a Covid-19 Solidarity Fund to finance the Group’s
initiatives in support of its employees and partners worldwide. The
fund is to be endowed with (i) €5 million deducted from the cash
initially set aside to pay the dividend, (ii) the full amount of
the reduction in Executive Committee remuneration, and (iii)
additional sums voluntarily contributed by Supervisory Board
members.
In view of the uncertainty over the duration and scale of the
epidemic and the government lockdowns and closures, the Group is
currently unable to assess the impacts of the crisis accurately and
reliably in terms of the decrease in revenue and operating profit
of fully-consolidated companies (recurring EBIT).
However, taking these corrective measures into account, the
Lagardère group estimates that the adverse impact on the full-year
2020 recurring EBIT of Lagardère Travel Retail could be in the
region of 20% to 25% of the decrease in its revenue. For Lagardère
Publishing, the Group estimates that the adverse impact on
full-year 2020 recurring EBIT could be in the region of 35% to 40%
of the decrease in its revenue.
At 31 March 2020, the Group’s liquidity stood at €1,940 million,
comprising €690 million in cash and cash equivalents and a
renewable credit facility for €1,250 million granted by a syndicate
of the Group’s banking partners and available in full. To
consolidate its liquidity, the Lagardère group has reached an
agreement with the banking syndicate granting the €1,250 million
renewable credit line to waive the covenant for June 2020 and
December 2020. The Group considers that it has sufficient liquidity
for full-year 2020, including in a pessimistic scenario as
simulated by Lagardère using the following main assumptions:
- Lagardère Travel Retail: operations remaining severely
disrupted for the rest of 2020, in line with the April 2020
situation;
- Lagardère Publishing and Other Activities: gradual return to
2019 business levels starting early in the second half of
2020;
- repayment of debt (with no refinancing) falling due over the
next 12 months, representing €681 million at 31 March 2020, of
which 78% corresponds to commercial paper.
The Group remains confident in its business model as refocused
on Lagardère Publishing and Lagardère Travel Retail. Thanks to its
liquidity position and to the corrective measures taken, the
Lagardère group expects to weather the Covid-19 crisis and to be
well placed to proactively benefit from the upturn in its
markets.
IV. INVESTOR CALENDAR(4)
2020 Annual General Meeting The 2020 Annual General Meeting will be held
on 5 May 2020 at 10:00 a.m.
First-half 2020 results First-half 2020 results will be released on
30 July 2020 at 5:35 p.m.
Third-quarter 2020 revenue Third-quarter 2020 revenue will be released
on 5 November 2020 at 8:00 a.m.
***
V. APPENDICES
CHANGES IN SCOPE OF CONSOLIDATION AND EXCHANGE RATES
First-quarter 2020
The difference between consolidated and like-for-like data is
mainly attributable to a €13 million positive foreign exchange
effect resulting chiefly from the appreciation of the US dollar and
pound sterling, and to a €14 million positive scope effect breaking
down as:
- a €26 million negative impact from disposals, essentially TV
channels and digital activities within the scope of the Group’s
strategic refocusing;
- a €40 million positive impact from acquisitions, carried out
mainly at Lagardère Travel Retail (acquisition of IDF representing
a positive €32 million and of Smullers representing a positive €2
million) and at Lagardère Publishing (acquisition of Gigamic
representing a positive €4 million and of Short Books representing
a positive €1 million).
VI. GLOSSARY
Lagardère uses alternative performance measures which serve as
key indicators of the Group’s operating and financial performance.
These indicators are tracked by the Executive Committee in order to
assess performance and manage the business, as well as by investors
in order to monitor the Group’s operating performance, along with
the financial metrics defined by the IASB. These indicators are
calculated based on accounting items taken from the consolidated
financial statements prepared under IFRS and a reconciliation with
those items is provided in this press release, in the full-year
2019 results presentation, or in the notes to the consolidated
financial statements.
Like-for-like revenue is used by the Group to analyse revenue
trends excluding the impact of changes in the scope of
consolidation and in exchange rates.
The like-for-like change in revenue is calculated by
comparing:
- revenue for the period adjusted for
companies consolidated for the first time during the period and
revenue for the prior-year period adjusted for consolidated
companies divested during the period; - revenue for the prior-year
period and revenue for the current period adjusted based on the
exchange rates applicable in the prior-year period.
The scope of consolidation comprises all fully-consolidated
entities. Additions to the scope of consolidation correspond to
business combinations (acquired investments and businesses), and
deconsolidations correspond to entities over which the Group has
relinquished control (full or partial disposals of investments and
businesses, such that the entities concerned are no longer included
in the Group’s financial statements using the full consolidation
method).
The difference between consolidated and like-for-like figures is
explained in section V - Appendices of this press release.
The Group’s main performance indicator is recurring operating
profit of fully consolidated companies (recurring EBIT),
which is calculated as follows:
Profit before finance costs and tax
Excluding:
- Income from equity-accounted companies before impairment
losses
- Gains (losses) on disposals of assets
- Impairment losses on goodwill, property, plant and equipment,
intangible assets and investments in equity-accounted
companies
- Net restructuring costs
- Items related to business combinations:
- Specific major disputes unrelated to the Group’s operating
performance
- Items related to leases and finance lease arrangements:
* Cancellation of fixed rental expense on concession agreements
is equal to the repayment of the lease liability, the associated
change in working capital and interest paid in the statement of
cash flows.
***
A live webcast of the first-quarter 2020
revenue presentation will be available today at 10:00 a.m. (CET) on
the Group’s website (www.lagardere.com).
The presentation slides will be made
available at the start of the webcast.
A replay of the webcast will be available
online later in the afternoon.
***
Created in 1992, Lagardère is an international group with
operations in more than 40 countries worldwide. It employs over
30,000 people and generated revenue of €7,211 million in 2019.
In 2018, the Group launched its strategic refocusing around two
priority divisions: Lagardère Publishing (Book and e-Publishing,
Mobile and Board games) and Lagardère Travel Retail (Travel
Essentials, Duty Free & Fashion, Foodservice).
The Group’s operating assets also include Lagardère News and
Lagardère Live Entertainment.
Lagardère shares are listed on Euronext Paris.
www.lagardere.com
Important notice:
Some of the statements contained in this document are not
historical facts but rather are statements of future expectations
and other forward-looking statements that are based on management’s
beliefs. These statements reflect such views and assumptions
prevailing as of the date of the statements and involve known and
unknown risks and uncertainties that could cause future results,
performance or future events to differ materially from those
expressed or implied in such statements.
Please refer to the most recent Universal Registration Document
(Document d’enregistrement universel) filed in French by Lagardère
SCA with the Autorité des marchés financiers for additional
information in relation to such factors, risks and
uncertainties.
Lagardère SCA has no intention and is under no obligation to
update or review the forward-looking statements referred to above.
Consequently Lagardère SCA accepts no liability for any
consequences arising from the use of any of the above
statements.
1 Alternative performance indicators. See the glossary at the
end of this press release. 2 Lagardère Publishing, Lagardère Travel
Retail, Lagardère News (Paris Match, Le Journal du Dimanche, Europe
1, Virgin Radio, RFM, the Elle brand licence), the Entertainment
business, the Group Corporate function and the Lagardère Active
Corporate function, whose costs are being wound down by end 2020.
3Paris Match, Le Journal du Dimanche, Europe 1, Virgin Radio, RFM
and the Elle brand licence. 4 These dates may be susceptible to
change.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200429005965/en/
Press Contacts Thierry
Funck-Brentano Tel. +33 1 40 69 16 34 tfb@lagardere.fr
Ramzi Khiroun Tel. +33 1 40 69 16 33 rk@lagardere.fr
Investor Relations Contact
Emmanuel Rapin Tel. +33 1 40 69 17 45 erapin@lagardere.fr
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