LAGARDERE (EPA:MMB) - Third-quarter 2021 revenue
Transparency directive : regulatory news
28/10/2021 08:00
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THIRD-QUARTER 2021 REVENUEParis, 28 October 2021, 8:00 a.m.
The Lagardère group steps up the pace of its recovery and confirms its
development ambitions
Lagardère Publishing: revenue growth of 9.5%(1) over the first nine months of
the year and acquisition of Workman Publishing
Lagardère Travel Retail: continued improvement in sales (up 17.4%)(1) driven by
growth in passenger traffic in most geographic areas and strategic partnership
concluded in North Asia
I. REVENUE
Revenue for the Lagardère group came in at EUR3,539 million in the first nine
months of 2021, up 8% on a reported basis and up 13% like for like. The
difference between reported and like-for-like figures is mainly attributable to
a EUR56 million unfavourable currency impact (due mainly to the US dollar) and
an EUR83 million negative scope effect, chiefly related to the non-retained
scope.
Revenue (EURm) Change Change
vs. 2020 (%) vs. 2019 (%)
30 September 30 September
2020 2021
(9 months) (9 months) reported like for like like for like
Lagardère
Publishing 1,675 1,826 +9.0 +9.5 +6.9
Lagardère
Travel Retail 1,340 1,541 +15.0 +17.4 -51.0
Other
Activities* 164 172 +4.9 +5.3 +5.3
Target scope 3,179 3,539 +11.3 +12.6 -30.1
Non-retained
scope** 97 - N/A N/A -
LAGARDÈRE 3,276 3,539 +8.0 +12.6 -30.1
* 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.
** Operations disposed (Lagardère Studios, excluding Lagardère Sports,
classified as a discontinued operation in accordance with IFRS 5).
(1) Like-for-like change over the first nine months of 2021 versus the same
period in 2020.
Revenue (EURm) Change Change
vs. 2020 (%) vs. 2019 (%)
Q3 2020 Q3 2021 reported like for like like for like
Lagardère
Publishing 704 696 -1.2 -3.0 +3.6
Lagardère
Travel Retail 393 710 +80.7 +81.5 -39.1
Other
Activities* 57 57 - +0.3 -9.3
Target scope 1,154 1,463 +26.7 +25.9 -23.0
Non-retained
scope** 34 - N/A N/A -
LAGARDÈRE 1,188 1,463 +23.1 +25.9 -23.0
* 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.
** Operations disposed (Lagardère Studios, excluding Lagardère Sports,
classified as a discontinued operation in accordance with IFRS 5).
The third-quarter 2021 figures below are presented on a like-for-like basis.
- Lagardère Publishing
Revenue for the nine months ended 30 September 2021 totalled EUR1,826 million,
up 9% as reported and up 10% like for like compared to the first nine months of
2020. This increase reflected a favourable base effect, and the division's good
performance over the first nine months of 2021, with revenue up a sharp 7% on a
like-for-like basis compared with the first nine months of 2019. The difference
between reported and like-for-like revenue is attributable to a EUR15 million
positive scope effect resulting mainly from the acquisitions of Laurence King
Publishing and board game publisher Hiboutatillus, and to a EUR24 million
negative currency impact essentially in connection with the US dollar.
In the third quarter of 2021, revenue totalled EUR696 million, down 3% compared
to the third quarter of 2020, primarily reflecting an unfavourable comparison
basis.
In France, revenue for the division moved back by 3% due to the absence of
curriculum reform in 2021 and the unfavourable comparison basis linked to the
sharp rebound in sales following the lockdowns in the third quarter of 2020.
Consumer appetite for reading - in particular for Illustrated books and
especially Youth Works on the back of France's Pass Culture incentive scheme
for young readers - remained elevated throughout the quarter.
In the United Kingdom, the 3% decline in revenue reflected the unfavourable
comparison basis with the third quarter of 2020 during which bestsellers such
as Stephenie Meyer's Midnight Sun posted strong sales performances. Sales
momentum remained sustained however, particularly in the Youth Works segment.
In the United States, the 9% contraction in revenue reflected the unfavourable
comparison basis with a strong third-quarter 2020 which was driven by
bestsellers such as Midnight Sun and various releases related to the Black
Lives Matter movement. In third-quarter 2021, sales were nonetheless lifted by
General Literature releases and growth in Distribution for third-party
publishers.
In Spain/Latin America, revenue grew by 4% on the back of a recovery in Mexico,
which had been severely impacted by the health crisis in 2020, and a stable
performance in Spain supported by the performance of General Literature.
Revenue for Partworks jumped by 9%, driven by good backlist performances in
France and the United Kingdom in particular, and by collections launched over
the past few months.
In the third quarter of 2021, demand among readers for digital formats was
sustained across the various geographic areas, despite an unfavourable
comparison basis. E-books accounted for 8.4% of total Lagardère Publishing
revenue, versus 9.9% in first-half 2020, while digital audio books represented
3.6% of revenue versus 3.7% in the third quarter of 2020.
- Lagardère Travel Retail
Revenue for the nine months ended 30 September 2021 totalled EUR1,541 million,
up 15% as reported and up 17% like for like versus the same year-ago period.
The difference between reported and like-for-like revenue is attributable to a
EUR32 million negative currency impact.
Revenue for the third quarter of 2021 came to EUR710 million, up 82% compared
to the same period in 2020, mainly reflecting a favourable comparison basis in
the third quarter of 2020, which was severely affected by travel restrictions
amid the health crisis.
In France, revenue for the division leapt 78% on the back of growth in
passenger traffic at stations and airports over the summer.
Revenue for the EMEA region (excluding France) jumped 53% in the wake of the
easing of travel restrictions across the continent. Sales growth in the region
was also lifted by healthy city centre sales.
North America posted stellar revenue growth of 172% driven by the sustained
recovery of domestic flights in the United States from the second quarter of
2021.
Asia-Pacific revenue was up by 52%, driven by strong sales momentum in Greater
China (up 65%), despite lockdowns in certain regions of the country in August
and September. The Pacific region remained broadly closed over the quarter.
- Other Activities
Revenue for the nine months ended 30 September 2021 totalled EUR172 million, up
5% as reported and up 5% like for like versus the same year-ago period.
Revenue for the third quarter of 2021 came to EUR57 million and remained stable
compared to the third quarter of 2020.
Lagardère News sales remained broadly stable, moving back by 1%. The 16%
decline in Radio revenues was mainly attributable to a decrease in advertising
revenues as a result of a more subdued radio advertising market environment and
lower audience figures. The Press segment posted growth of 1% driven by good
advertising momentum at Paris Match and Le Journal du Dimanche, despite slower
Circulation activity.
Elle licensing activities recorded growth of 23% and continued to benefit from
the easing of restrictions in various countries.
II. KEY EVENTS SINCE 26 JULY 2021
Acquisition of Workman Publishing
On 16 August 2021, Hachette Livre's US subsidiary Hachette Book Group entered
into an agreement to acquire the entire share capital of independent US
publisher Workman Publishing, a specialist in Children and Young Adult titles
and Non-Fiction titles.
The USD 240 million acquisition was completed on 23 September 2021, following
clearance from the competition authorities.
In the context of strong market consolidation, this acquisition is set to
enable Hachette Livre to significantly boost Hachette Book Group's US
footprint, strengthen its positions in Youth Works and thereby create growth
opportunities in expanding markets.
Strategic partnership for Lagardère Travel Retail in Asia
On 1 September 2021, Lagardère Travel Retail signed an agreement between
several investors including leading e-commerce specialist JD.com for the
acquisition of a stake in Lagardère Travel Retail Asia, representing 22.36%
the total share capital (of which 18.63% for JD.com). The transaction, which
was completed on 30 September 2021, is part of a strategic partnership that
will ramp up Lagardère Travel Retail's development in Asia, particularly
through digital distribution channels.
Proposed acquisition by Vivendi SE of Amber Capital's entire interest in
Lagardère SA
On 15 September 2021, Vivendi SE announced that it had entered into an
agreement with Amber Capital on 14 September 2021 to acquire Amber Capital's
entire interest in Lagardère SA, representing 17.93% of the share capital, at
a price of EUR24.10 per share (ex-dividend), by 15 December 2022, subject to
obtaining the necessary regulatory clearance, in particular from the European
Commission and the French broadcasting authority (Conseil supérieur de
l'audiovisuel).
The completion of this acquisition would increase Vivendi SE's interest in the
share capital and voting rights of Lagardère SA to above the 30% thresholds,
and would be followed by a mandatory filing by Vivendi SE of a public offer for
all Lagardère SA shares, at the same price.
The Board of Directors of Lagardère SA is setting up an ad hoc committee in
accordance with stock market regulations, comprising a majority of independent
members, responsible for monitoring the process and preparing the draft opinion
that the Board of Directors will be invited to issue, in due course, on the
planned public offer.
2022-2024 strategic plan
On 24 September 2021, the Board of Directors of Lagardère SA was convened by
Arnaud Lagardère for the presentation of the 2022-2024 strategic plan. The
plan is aligned with the model set out at the time of Lagardère's conversion
into a joint-stock company, based on complementary businesses and enhanced
operational performance.
Bond issue
On 30 September 2021, Lagardère SA successfully issued EUR500 million worth of
six-year bonds maturing in October 2027 and paying an annual coupon of 1.75%.
The successful launch of this bond issue underlines market confidence in the
Group's solid financial profile.
EUR150 million of the proceeds was used to reduce the nominal amount of the
EUR500 million bond maturing in April 2023. The remaining proceeds of the 2027
bond issue will be used to pay down a portion of the state-backed loan
contracted by Lagardère SA, as well as for general corporate purposes. These
transactions are aligned with the Group's prudent financial strategy, aimed in
particular at extending the average maturity of its debt.
III. LIQUIDITY
The Group's liquidity position remains solid, with EUR1,914 million in
available liquidity (available cash and short-term investments reported on the
balance sheet totalling EUR812 million and an undrawn amount on the revolving
credit facility of EUR1,102 million).
The covenants of the revolving credit facility were therefore met at 30
September 2021.
IV. OUTLOOK
The effects of the health crisis and gradual easing of restrictions have had
differing effects on Lagardère Publishing and Lagardère Travel Retail. The
environment remains uncertain for the final quarter of 2021, in light of the
various emerging Covid-19 variants. Lagardère is pressing ahead with its
Group-wide cost cutting and cash control efforts.
- Lagardère Publishing
In the context of the health crisis, the increased appeal of reading is
reflected in Lagardère Publishing's sales performance. In addition, the
release of an Asterix album is expected to partially counter the absence of
curriculum reform in 2021.
Lagardère Publishing's profitability continues to be driven by strong sales
momentum and a favourable product mix, and the division now expects to post an
operating margin(2) close to 12% for full-year 2021(3).
- Lagardère Travel Retail
Trading at Lagardère Travel Retail closely mirrors air passenger traffic in
the different geographic areas, amid a still-uncertain - albeit improving -
context. Due to the diversity of the division's footprint and operating
segments, it is benefiting from the momentum of national and regional flights
in the United States, Europe and Greater China, and is preparing for the
forthcoming reopening of international Europe-US air routes.
Lagardère Travel Retail is actively pressing ahead with its operational
excellence drive launched in 2020, enabling it to further minimise flow through
in 2021 to within a range of 12% to 15%(4).
Lagardère Travel Retail is also continuing efforts to control cash, especially
as regards working capital and capital expenditure.
(2) Recurring EBIT as a percentage of revenue, see Glossary for definition.
(3) Excluding Workman Publishing.
(4) Negative impact on recurring EBIT of the decrease in 2021 revenue versus
2019.
V. INVESTOR CALENDAR
- Full-year 2021 results: Thursday, 17 February 2022 after market close.
VI. APPENDICES
CHANGES IN SCOPE OF CONSOLIDATION AND EXCHANGE RATES
At 30 September 2021:
The difference between reported and like-for-like data is mainly attributable
to a EUR56 million negative currency impact resulting essentially from the
depreciation of the US dollar, and to a EUR83 million negative scope effect,
breaking down as:
. a EUR17 million positive impact of external growth transactions, chiefly
reflecting the acquisition of Laurence King Publishing at Lagardère
Publishing;
. a EUR100 million negative scope effect attributable to the impact of
disposals, mainly concerning Lagardère Studios for EUR93 million and
Brainbow for EUR3 million at Lagardère Publishing.
Third-quarter 2021:
The difference between reported and like-for-like data is largely attributable
to a EUR3 million positive currency impact and to a EUR28 million negative
scope effect, breaking down as:
. a EUR7 million positive impact of external growth transactions, chiefly
reflecting the acquisition of Laurence King Publishing at Lagardère
Publishing;
. a EUR35 million negative scope effect attributable to the impact of
disposals, mainly concerning Lagardère Studios for EUR33 million and
Brainbow for EUR1 million at Lagardère Publishing.
VII. 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 or in the Third-quarter 2021 Revenue
presentation.
> Like-for-like revenue
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 reported and like-for-like figures is explained in
section VI - 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 (loss) 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 leases
* 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.
> Flow-through ratio
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.
> Operating margin
Operating margin is calculated by dividing recurring operating profit of fully
consolidated companies (Group recurring EBIT) by revenue.
A live webcast of the third-quarter 2021 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 some 28,000 people and generated
revenue of EUR4,439 million in 2020.
The Group focuses on 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 SA with the Autorité des marchés financiers for additional
information in relation to such factors, risks and uncertainties.
Lagardère SA has no intention and is under no obligation to update or review
the forward-looking statements referred to above. Consequently, Lagardère SA
accepts no liability for any consequences arising from the use of any of the
above statements.
Press Contact
Ramzi Khiroun
Tel. +33 1 40 69 16 33
rk@lagardere.fr
Image 7 Contact
Anne Méaux
Tel: +33 6 89 87 61 76
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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