Amsterdam,
24
October
2014
|
08:00
Europe/Amsterdam

Trading update TMG third quarter

Summary

KEY POINTS FOR THE FIRST NINE MONTHS OF 2014

  • TMG revenues and EBITDA under pressure in almost all business units in third quarter
  • Revenues declined by 5.7% to € 374.9 million compared to the first nine months of 2013
  • New Executive Board has started an analysis
  •  

KEY TRENDS
The results for the third quarter decreased in line with previous quarters. Although the € 120 million cost reduction programme is on track, revenues are disappointing and the savings are insufficient to increase EBITDA.

Geert-Jan van der Snoek, CEO of Telegraaf Media Groep (TMG): “Revenues from print activities are falling behind and the cost of past promotional actions to stimulate circulation have not been matched by the revenues from these actions. The net revenues from circulation across the board decreased in the first nine months by 3.2% to € 206.3 million. Advertising revenues declined by 12.6% to € 122 million in the same period.” 

In the third quarter, the Executive Board line-up was completely changed. On 1 July, Geert-Jan van der Snoek took over as CEO of TMG. On the same date, Mr M.A.M. Boersma, Chairman of the Supervisory Board, stepped down as delegated supervisory board member. On 1 September, Leo Epskamp joined the Executive Board as CFO, completing the new Executive Board. The Supervisory Board decided to renew and reinforce the Executive Board to ensure the ability to respond decisively to rapid changes in consumer behaviour and hence in the media sector.

Van der Snoek: “Over the past three months, we have conducted an initial analysis of all business units. We have directly addressed a number of operational issues and are now working on a course for the long term. The picture that is emerging from our analysis is that we can achieve an improvement in our market position in many areas. Based on our extensive content production there are numerous possibilities for greater synergy between the different business units. TMG has very strong brands. Through a stronger cross-media coordination around platforms and brands, we can gain a stronger position. Consumers are moving en masse towards online media. In line with this trend, we are seeing national advertisers increasingly shifting their budgets towards TV and online platforms. Our chance of playing a leading role lies in this market shift towards online media. We can also see plenty of room for improvement internally. We are performing analyses of the underlying performance of all business units. The company’s cost awareness, its focus and effectiveness of execution and the efficiency of processes and systems all definitely need to move up a level.”

Over the first nine months of 2014, Telegraaf Media Groep realised a recurring EBITDA result of € 30.9 million, whereas in the same period in 2013 a recurring EBITDA result of € 37.4 million was achieved. This represents a decrease of more than 17%.

De Telegraaf daily newspaper made its final preparations for the launch of the tabloid format in the third quarter, presenting a strong profile in connection with this launch. With the merger of Metro and Spits into a one newspaper representing the best of the two titles, not only efficiency but also a greater reach was achieved. Both changes were made on 10 October. TMG now has the two largest dailies in the country.The number of subscriptions to both national and regional media declined in the third quarter. As a result, spare capacity in the printing plants increased. At the regional newspapers, the previously planned cost reduction programmes have been started cautiously, but not on a sufficient scale for the longer term. Numerous new initiatives have been taken to strengthen the group’s digital position. However, as yet, TMG’s digital offerings are not enough to offset the decline in print.At Sky Radio Group, the repositioning of Radio Veronica is still a recent event, and the new approach still needs to translate into a greater reach and higher sales. Due to the decrease in the number of listeners at Radio Veronica, Sky Radio Group’s revenues fell. Sky Radio however, is one of the most popular radio stations in the Netherlands.Keesing Media Group shows that the puzzle market in Europe is also beginning to go digital. However, Keesing Media Group’s circulation revenues remained stable.The cash balance as at 30 September 2014 was € 29.4 million. In the same period last year, the cash balance was € 320.6 million. The decrease can mainly be explained from pay out of dividends.

Total revenues decreased by € 8.0 million (6.6%) in the third quarter of 2014 compared to the same period last year. The decline in advertising revenues totalled € 5.5 million (-13.8%), while circulation revenues fell by € 1.9 million (-2.6%).In the third quarter of 2014 a recurring EBITDA result was achieved of € 9.8 million (third quarter of 2013: € 10.6 million). The EBITDA margin was 8.1% and was similar to last year (8.2%).

*TMG’s business operations are subject to seasonal fluctuations under normal economic circumstances. Advertising revenues are higher in the second and fourth quarters of the year than in the remainder of the year. This is related to the public holidays during these periods. Single copy sales of De Telegraaf and Keesing Media Group’s publications are higher in the third quarter due to the holidays. The operating results are reported on the basis of continued operations. The comparing numbers for 2013 have been adjusted accordingly.