Semi-annual results 2001

During the period from 1 January to 15 July 2001, N.V. Holdingmaatschappij De Telegraaf made a net profit of NLG 42.4 million (€ 19.2 million) compared to a net profit of NLG 67.8 million (€ 30.8 million) for the comparable period in 2000. Net earnings per share of NLG 0.50 (€ 0.23) par value fell by 37% from NLG 1.29 (€ 0.59) to NLG 0.81 (€ 0.37).

Group turnover rose by 5.4% to NLG 1 billion (€ 454 million). This figure includes the turnover of Uitgeversmaatschappij De Limburger B.V., which has been consolidated from 22 May 2000 on. Organic consolidated turnover fell by 1.9%.

The chief causes underlying the fall in profit are the economic decline, which is mainly reflected in the advertising volume, the sharp rise in newsprint prices and delivery costs. On top of this, (start-up) losses relating to Internet activities rose from NLG 30 million (€ 13.6 million) to NLG 35 million (€ 15.9 million) company-wide. The costs of new own activities, including DFT.nl (De Financiële Telegraaf on line) and the development of Internet applications at the regional newspapers were offset by, on balance, lower losses from Internet participating interests. Partly owing to the economy measures taken, Internet costs for the whole of 2001 will remain below the 2000 level (NLG 60 million or € 27.2 million). Revenues lagged far behind expectations.

The group result also includes the start-up loss of the free News.nl afternoon paper, which was taken off the market on 4 April 2001.

The fall in advertising volume at daily newspaper De Telegraaf (over 10%) bears a close resemblance to developments in 1980 and 1991: both years signalled the beginning of a temporary economic downturn. Traditionally, these economic effects are first noticeable at daily newspaper De Telegraaf before becoming evident at other national and regional newspapers.

The decline in volume was particularly noticeable in the staff and national brands and services categories. In contrast, local brands and services showed a modest rise, while the volume of classified ads (Speurders) exhibited a limited drop. Circulation income rose by approximately 5%.

The economic downturn notwithstanding, advertising turnover of the free morning paper ‘Sp!ts’ all but doubled. As a result, the paper virtually achieved a break-even result at an average circulation of over 350,000 copies.

The decline in advertising volume made itself felt at the regional newspapers from the second quarter of 2001 on. Volume shrank by around 3% compared to the corresponding figure for the first half-year of  2000. Higher depreciation as a result of the commissioning of the new press, as well as start-up losses incurred by the regional Internet activities, plus rising newsprint and delivery costs depressed the result of Hollandse Dagbladcombinatie B.V. The integration of daily newspaper publishers Damiate and De Gooi- en Eemlander into a regional publisher, realised last June, stands to boost the result.

In Limburg a better result is achieved owing to the synergy realised by the integration of the two Limburg newspaper publishers into Media Groep Limburg.

Hollandse Huis-aan-huisbladen Combinatie B.V. realised a slight rise in advertising volume.  Nevertheless, the result declined due to sharply risen newsprint and delivery costs.

De Telegraaf Tijdschriften Groep B.V. performed better than last year, despite the start-up losses of FHM in the Netherlands and Cosmopolitan in Sweden.

At Biegelaar Groep B.V., whose main activity is third-party printing, the market's reticence was strongly felt, especially because the renewal of the printing capacity became operational during this very half-year period. Higher interest charges and depreciation, lower margins, as  well as start-up costs of the new press caused the result to decline sharply. Measures to improve the result are being taken.

Income from participating interests was affected by:

  • higher (total) dividend from Wegener B.V.;
  • start-up costs relating to the expansion at SBS Broadcasting B.V. with the V8 channel;
  • lower net losses incurred by the Internet participating interests.

The tax burden rose from 38.2% to 43.7% as a result of the lower amortisation of tax-deductible goodwill. The goodwill relating to Elsevier's special-interest magazines taken over in 1996, the final portion of which was amortised in 2000 (NLG 22 million or € 10 million on an annual basis) is currently offset by goodwill relating to the takeover of Uitgeversmaatschappij De Limburger B.V. (NLG 17 million or € 7.7 million per year), amortisation which is not tax-deductible.

A forecast of the group result for the whole of 2001 would have to take account of, amongst other things:

  • a further decline in advertising turnover due to major advertisers effecting considerable reductions in their advertising contracts;
  • the full effect of the rise in newsprint prices;
  • start-up losses of the Starstyle magazine, to be introduced next September, and the Cosmopolitan magazine, which was launched on the Swedish market at the beginning of this year;
  • a further rise in distribution costs;
  • a price rise effective from 1 October next for subscriptions and single copies at daily newspaper De Telegraaf;
  • the effect of the economy measures taken and still to be taken.

In light of this, the result is unlikely to see a considerable improvement over developments during the first six months, which means that the net profit for the whole of 2001 will be considerably lower than that recorded for 2000.