Group revenue down 38.3%(1) in third-quarter
2020, to €1,188 million
Lagardère Publishing revenue up 6.0%(1) to
€704 million, buoyed by the success of its publications and a
market rebound
Lagardère Travel Retail revenue down
66.1%(1) to €393 million, owing to the slump in global air
traffic
Regulatory News:
The Lagardère group (Paris:MMB) saw a year-on-year revenue
decline of 38.3%(1) in the third quarter of 2020, hit hard by the
impacts of the pandemic on its Travel Retail business. This decline
was partly countered by a 6.0%(1) rise in revenue for Lagardère
Publishing over the same period, driven by the success of its
publications.
- Lagardère Publishing: the 6.0% revenue increase was
driven by a good performance in France, which benefited from
advances in General Literature and Illustrated Books, and by
vigorous business growth in the United States and the United
Kingdom spurred by the success of a large number of best-selling
titles and by upbeat trends in digital formats.
- Lagardère Travel Retail: following a slight upturn in
trading observed as from the end of the second quarter through to
mid-August, Lagardère Travel Retail was impacted by the second wave
of Covid-19, reporting a 66.1%(1) drop in revenue in the third
quarter. Tighter travel restrictions introduced as from the end of
August 2020 hit trading in all of the division’s regions with the
exception of mainland China. Lagardère Travel Retail is continuing
its efforts to cut costs in these uncertain times.
I. REVENUE
Revenue (€m)
Change
30 September 2019 (9
months)
30 September 2020 (9
months)
on a consolidated
basis
on a like-for-like
basis
Lagardère Publishing
1,707
1,675
-1.9%
-2.8%
Lagardère Travel Retail
3,147
1,340
-57.4%
-58.8%
Other Activities*
208
164
-21.5%
-21.1%
Target scope
5,062
3,179
-37.2%
-38.3%
Non-retained scope**
187
97
-47.9%
-24.6%
LAGARDÈRE
5,249
3,276
-37.6%
-38.0%
Revenue (€m)
Change
Q3 2019
Q3 2020
on a consolidated
basis
on a like-for-like
basis
Lagardère Publishing
663
704
+6.3%
+6.0%
Lagardère Travel Retail
1,152
393
-65.9%
-66.1%
Other Activities*
63
57
-9.7%
-9.6%
Target scope
1,878
1,154
-38.5%
-38.8%
Non-retained scope**
47
34
-27.7%
-14.4%
LAGARDÈRE
1,925
1,188
-38.3%
-38.3%
* Lagardère News (Paris Match, Le Journal du Dimanche, Europe 1,
Virgin Radio, RFM and the Elle brand licence), the Entertainment
businesses, and the Group Corporate function. ** Assets in the
process of being sold at 30 September 2020. Lagardère Studios. Note
that in 2019, “Other Activities” included TV Channels and other
digital assets.
Revenue for the nine months ended 30 September 2020 totalled
€1,675 million, down 1.9% on a consolidated basis and down 2.8%
like for like, largely eliminating the lag recorded in the first
half of the year. Scope effects added €18 million to revenue
and reflected the acquisition of Le Livre Scolaire, Blackrock Games
and Short Books, while foreign exchange effects reduced revenue by
€3 million.
The health crisis and associated lockdown restrictions put in
place across the division’s regions had a negative like‑for‑like
impact of 8.3% in first-half 2020. The rebound in trading
observed in June was confirmed during the third quarter, which saw
like-for-like revenue growth of 6.0%.
Third-quarter 2020:
Revenue for the division totalled €704 million, up 6.3% on a
consolidated basis and up 6.0% like for like. Scope effects
added €12 million to revenue, while foreign exchange effects
reduced revenue by €11 million.
The figures below are presented on a like-for-like basis.
France reported revenue growth of
4.8% on the back of advances in General Literature and Illustrated
Books, which benefited from the release of Stephenie Meyer’s
Midnight Sun during the quarter. In contrast, Education was down as
expected, with only one level of high school curriculum reform this
year.
Business surged 19.2% in the United
States, spurred by the release of Stephenie Meyer’s Midnight
Sun at Little, Brown Books for Young Readers in August and the
latest title by Nicholas Sparks, The Return, at Grand Central
Publishing in September. Several titles linked to the Black Lives
Matter movement published by Perseus and Little, Brown Books for
Young Readers, also enjoyed success. Digital formats continue to
enjoy bullish growth.
The United Kingdom also saw robust
revenue growth over the quarter, up 15.6% thanks to the release of
Midnight Sun and to a good performance from General Literature, led
by Robert Galbraith’s Troubled Blood, released in September.
Business in the United Kingdom also continued to benefit from
strong momentum in digital sales.
Business in Spain/Latin America was
down by 20.8%, hit hard by less extensive curriculum reform in
Spain and Mexico, and by the impacts of the health crisis.
Partworks revenue was down 7.6%
owing to a lighter release schedule in the first half of 2020
compared with a prior‑year comparison basis that had benefited from
numerous successful launches, notably in France.
E-books as a proportion of total
Lagardère Publishing revenue continued to grow, representing 9.9%
in the third quarter of 2020 versus 7.8% in third-quarter 2019,
while downloadable audiobooks
represented 3.7% of revenue compared to 2.9% one year earlier.
Lagardère Travel Retail revenue for the nine months to 30
September 2020 totalled €1,340 million, down 57.4% on a
consolidated basis and down 58.8% like for like, reflecting the
impacts of the Covid-19 pandemic. The scope impact resulting
mainly from the acquisition of International Duty Free (IDF) in
Belgium added €51 million to revenue, while the foreign exchange
effect reduced revenue by €8 million.
Third-quarter 2020:
Revenue for the division totalled €393 million, down 65.9% on
a consolidated basis (down 66.1% like for like). The scope
impact added €13 million to revenue, while the foreign exchange
effect reduced revenue by €10 million.
In the third quarter, the different regions in which
Lagardère Travel Retail operates were affected by government
measures to restrict travel amid the pandemic’s second wave.
Airport points-of-sale were hit harder than other locations in
which Lagardère Travel Retail operates, such as rail stations and
town centres.
The figures below are presented on a like-for-like
basis.
In France, the division reported a 71.3% fall in
trading, due mainly to the measures restricting international air
traffic. Non-airport trading declined to a lesser extent (down
53.6%), with rail traffic (mainly domestic) less affected by the
travel restrictions.
Revenue for the
EMEA region
(excluding France) fell
61.0%. After increasing slightly at the start of the summer
compared to second-quarter 2020, passenger traffic was down during
August due to the introduction of more stringent travel
restrictions in most countries in the region.
North
America reported a 69.6%
drop in revenue, as passenger traffic remained sluggish due to the
lockdown measures put in place in various states to combat the
pandemic.
Asia-Pacific revenue was down
66.8%, reflecting stark contrasts across the region. Australia and
New Zealand (Pacific region) kept their borders closed during the
period, resulting in virtually zero passenger traffic in these
countries (revenue down 92.5%). This was partly countered by 35.6%
revenue growth in mainland China
spurred by increased domestic travel, new store openings and a good
online and social media sales performance.
Revenue for the nine months ended 30 September 2020 totalled
€164 million, down 21.5% on a consolidated basis (down 21.1% like
for like).
Third-quarter 2020:
Third-quarter 2020 revenue for Other Activities came in at
€57 million, down 9.7% on a consolidated basis and down 9.6% like
for like.
The figures below are presented on a like-for-like basis.
The third-quarter performance at Lagardère News(2) (revenue down
8.7%) was mainly driven by the radio business, which reported 8.5%
revenue growth thanks to advertising slots taken up by announcers
during the summer.
In general however, advertisers have been cutting their press
advertising budgets, which has taken a toll on the press (down
14.5%) and international licensing (down 28.5%) businesses.
Lagardère Live Entertainment revenue fell 58.7% as health
measures severely restricted events at venues.
Revenue for the non-retained scope in the first nine months
of 2020 came in at €97 million, down 47.9% on a consolidated basis
and down 24.6% like for like. The scope impact relating to the
sale of TV Channels in September 2019 and of other digital assets
had a negative €58 million impact on revenue.
Third-quarter 2020:
Third-quarter 2020 revenue for the non-retained scope came in
at €34 million, down 27.7% on a consolidated basis (down 14.4% like
for like).
Lagardère Studios saw its revenue decline 14.4% as a result of
lower production activity levels in 2020 owing to Covid-19-related
health measures.
II. KEY EVENTS SINCE 30 JULY 2020
17 August 2020: Lagardère SCA announced a new strategic roadmap
to adjust to the impacts of the crisis and set up a stabilised and
reinforced governance team to implement it. Arnaud Lagardère was
re-appointed as Managing Partner for a period of four years, and a
Management Board was set up.
31 August 2020: the Supervisory Board of Lagardère SCA co-opted
Valérie Bernis as an independent member.
31 August 2020: the Managing Partners and Supervisory Board
rejected the joint request by Amber Capital and Vivendi to call an
extraordinary general meeting and initiated a dialogue with the
shareholders.
14 October 2020: Lagardère SCA welcomed the decision announced
by the President of the Paris Commercial Court (Tribunal de
Commerce de Paris), rejecting the request by Amber Capital and
Vivendi to call an extraordinary general meeting and reiterated its
desire to engage in a dialogue with the shareholders. Amber Capital
and Vivendi have appealed this decision.
15 October 2020: Sophie Stabile was appointed Chief Financial
Officer of the Lagardère group.
30 October 2020: the Lagardère group finalised the sale of
Lagardère Studios to Mediawan in accordance with the
previously-announced terms and conditions.
4 November 2020: Michel Defer, an employee of the Lagardère
Publishing division, joined the Supervisory Board of Lagardère SCA
as an employee representative member, on appointment by the Group
Employees’ Committee.
III. COVID-19: OUTLOOK AND LIQUIDITY
In light of the uncertain economic environment due to the
pandemic and particularly the difficulty in predicting the
conditions in which air travel will resume, the Group confirms that
it is withdrawing its recurring EBIT guidance published on 27
February 2020, which was suspended indefinitely on 25 March
2020.
The Company intends to pursue the shareholder dialogue initiated
in late August 2020, around the shared aim of ensuring that the
Group weathers this unprecedented crisis as well as possible and
emerges from it strengthened.
The sharp rebound in Lagardère Publishing sales that had been
observed in June 2020 as lockdown measures were eased continued
throughout the third quarter, albeit at a slightly more moderate
pace. This momentum was driven by high-quality publications in the
General Literature and Illustrated Books segments, despite a
downturn in Education and Partworks, thereby confirming the
resilience of Lagardère Publishing’s business model. However, the
Publishing business will be contending with an unfavourable
prior-year comparison basis in fourth-quarter 2020, due to the
absence of Asterix album releases (albums are only released every
other year). The lockdown measures announced recently in several
European countries will also affect sales in France and, to a
lesser extent, the United Kingdom.
In light of envisaged cost reductions and a favourable revenue
mix, Lagardère Publishing expects the adverse impact on full-year
2020 recurring EBIT to be in the region of 20% to 30% of the
decrease in its revenue.
The second wave of the Covid-19 pandemic has considerably
dampened the modest gradual upturn at Lagardère Travel Retail
observed at the start of the summer. Revenue in October 2020 is
expected to be down around 65% year on year. Trading volumes for
the last quarter of the year remain uncertain in light of travel
restrictions recently being strengthened by governments as the
pandemic spreads once again.
The division is continuing to implement cost cutting measures,
with major impacts on rents and payroll costs in particular. These
initiatives enable Lagardère Travel Retail to maintain the
assumption of an adverse impact on full-year 2020 recurring EBIT in
the region of 20% to 25% of the decrease in its 2020 revenue.
Liquidity
At 30 September 2020, the Group’s liquidity stood at €1,387
million, comprising €837 million in cash and cash equivalents and
an undrawn amount of €550 million on the €1,250 million renewable
credit facility granted by a syndicate of the Group’s banking
partners. The decrease of €84 million compared to end-June 2020
mainly results from a €139 million reduction in outstanding
commercial paper.
Note that the Group has been granted a waiver on the covenant
(leverage ratio) applicable to its renewable credit facility in
December 2020.
***
IV. APPENDICES
CHANGES IN SCOPE OF CONSOLIDATION AND EXCHANGE RATES
At 30 September 2020:
The difference between consolidated and like-for-like data is
attributable to a €11 million negative foreign exchange effect
resulting from the depreciation of the Polish zloty, Mexican peso
and Czech koruna, as well as to a €10 million positive scope
effect, breaking down as:
- a €69 million positive impact from acquisitions, carried out at
Lagardère Travel Retail (acquisition of IDF representing a positive
€47 million) and at Lagardère Publishing (mainly the acquisition of
Le Livre Scolaire representing a positive €11 million and of
Blackrock Games representing a positive €4 million);
- a €59 million negative impact from disposals, essentially TV
Channels and digital activities within the scope of the Group’s
strategic refocusing.
Third-quarter 2020:
The difference between consolidated and like-for-like data is
attributable to a €21 million negative foreign exchange effect
resulting from the depreciation of the US dollar and, to a lesser
extent, the Polish zloty, as well as to a €17 million positive
scope effect, breaking down as:
- a €25 million positive impact from acquisitions, carried out
mainly at Lagardère Travel Retail (acquisition of IDF representing
a positive €13 million) and at Lagardère Publishing (acquisition of
Le Livre Scolaire representing a positive €10 million and of
Blackrock Games representing a positive €2 million);
- a €8 million negative impact from disposals, essentially TV
Channels within the scope of the Group’s strategic refocusing.
V. 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 Management Board 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 or in the
Third-quarter 2020 Revenue presentation.
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 IV - Appendices of this press release.
- Recurring EBIT (Group recurring EBIT)
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 (loss) 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:
- Acquisition-related expenses - Gains and
losses resulting from purchase price adjustments and fair value
adjustments due to changes in control - Amortisation of
acquisition-related intangible assets
• Specific major disputes unrelated to the Group's operating
performance
• Items related to leases and finance sub-leases:
- Cancellation of fixed rental expense* on
concession agreements - Depreciation of right-of-use assets on
concession agreements - Gains and losses on lease modifications
under concession agreements
* Cancellation of fixed rental expense is equal to the repayment
of the lease liability, the associated change in working capital
and interest paid in the statement of cash flows.
Flow through is calculated by dividing the change in recurring
operating profit of fully-consolidated companies (recurring EBIT)
by the change in revenue. This indicator is used by the Group in
the context of the Covid-19 pandemic to measure the effect of the
decline in revenue on recurring EBIT.
***
A live webcast of the third-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
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 On a like-for-like basis versus third-quarter 2019. 2 Paris
Match, Le Journal du Dimanche, Europe 1, Virgin Radio, RFM and the
Elle brand licence.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201104005805/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 Contacts
Emmanuel Rapin Tel. +33 1 40 69 17 45 erapin@lagardere.fr
Alima Lelarge Levy Tel. +33 1 40 69 19 22
alelargelevy@lagardere.fr
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