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PRISA's comparable EBITDA sees 3% growth

27-04-2018

PRISA's comparable EBITDA sees 3% growth
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  • The Education business, in line with expectations, has been affected by negative exchange rates and, temporarily, by the application of the IFRS 15
  • In the News and Information business, Radio improves profitability, driven by good results in Latin America, while Press continues to see digital growth
  • Net debt stands at 818 million, compared to 1,422 million in December. Cash generation was positive for the quarter.
  • The implementation of the efficiency plan has led to savings of 8.5 million euros in the first quarter of the year. The impact on EBITDA is 6.9 million euros.
  • The net result in the first quarter of 2018 is 9.9 million euros.
  • The Group maintains its forecasts for the year

 

PRISA Group reported comparable EBITDA (that is, at a constant exchange rate and without the temporary impact of IFRS 15) of 87.6 million in the first quarter of the year, which represents an increase of 3% compared to that posted for the same period of the year in 2017. 

In line with company expectations, the Education division has been affected by the negative evolution of exchange rates, as well as by the application of IFRS 15. This, which became effective in January, establishes a new revenue recognition model under which revenue is recognised either over time, in a manner that best reflects the company’s performance, or at a point in time, when control of the goods or services is transferred to the customer. The implementation of this model temporarily affected the businesses of the UNO and Compartir learning systems, and has had a negative impact on income, of 8.2 million, and on  EBITDA, of 4.6 million, from January to March. This will be corrected throughout the rest of year. Excluding this effect, and at a constant exchange rate, Santillana has reported total revenues of 215 million euros, with comparable EBITDA up by 2%.

The News and Information business continues its consolidation, with the latest figures from the EGM confirming the leadership of PRISA Radio stations in Spain. Cadena SER celebrates 25 years of uninterrupted leadership in Spanish radio and all its programs are leaders in their respective time slots. LOS40 is the leading music radio network, the second ranked station in terms of listeners after Cadena SER and the one to see highest growth, according to the EGM.

The impact of exchange rates has been negative, affecting income negatively by 2.7 million and  EBITDA by 0.2 million. At a constant exchange rate, Radio's adjusted EBITDA improved by 27% to reach 7 million euros.

In the first quarter of this year, PRISA Noticias’ news media reported 125 million unique browsers, which represents 29% growth. El País maintains its lead in Spain with a market share of 41% and it remains the number one newspaper in Spanish worldwide. Meanwhile, the newspaper AS reinforces its digital lead in the Americas.

Revenues were down 9.4%, at 45.7 million euros. The increase in digital advertising and other digital businesses has failed to offset the drop in conventional advertising and fall in circulation. However, digital advertising is up by 2% and now represents 51% of total advertising revenue. In the case of AS, its digital revenues represent 79% of the total. Adjusted EBITDA for Press was -0.7 million euros compared to 0.9 million in the same period of 2017.

PRISA has reduced its debt to 818 million euros compared to 1,224 million at the end of 2017, thanks to funds obtained from the capital increase and positive cash generation. Costs associated with interest expenses have been reduced by 1.6 million euros.

The company is carrying out the efficiency plan announced last February, with the aim of saving 40 million euros over the next 3 years, chiefly in the media and corporate areas. In the period from January to March 2018, the implementation of these measures has led to savings of 8.5 million euros, with an impact on EBITDA of 6.9 million euros.

The net result for the first quarter of the year was 9.9 million, compared to 21.9 million for the same period of the previous year.

 

Other significant events by business units

 

In the area of ​​education

  • The publisher Norma and digital learning systems will continue to show growth.
  • The UNO and Compartir learning systems have seen student numbers grow, from January to March, by 8% to exceed one million.
  • The campaigns in the southern region have behaved in line with expectations, showing a fall of 5% due to the absence of extraordinary institutional sales in Brazil and the delay in institutional sales in Argentina – now set to take place in the second quarter of 2018.
  • The exchange rate has had a negative impact mainly due to the evolution of rates in Brazil and Argentina. This negative impact was 33 million euros in revenues and 17 million euros in EBITDA.

 

In the Radio business

  • In the first quarter of 2018, adjusted revenues for radio grew by 1% in constant currency (-3.5% in euros) driven by strong performance in Latin America, where revenues grew by 10% in constant currency. Spain reported a decline in income, compared with the previous year due to the so-called Easter effect, with the holiday this year falling in March.
  • The impact of exchange rates was negative at 2.7 million.
  • In Spain, adjusted revenues reached 39.9 million euros in the period, compared to 41.7 million recorded for the same period of the previous year. The fall is mainly explained by the drop in advertising associated with the Easter effect.
  • Gross advertising revenues fell 2.4%, with local growth of 2.1%. Nationally the fall was of of 7.1%. Discounting the effect of Easter, gross advertising revenues would have remained stable.
  • In Latin America, adjusted revenues reached 22.1 million euros compared to 20.0 million in the same period of 2017, an increase of 10%. There was noteworthy performance in Colombia, Chile and Mexico.
  • The expectation for the rest of the year is that publicity will rebound due to the positive impact of the World Cup and the different electoral events that will take place in Latin America.

 

In the Press division

  • Advertising revenues reached 21.4 million euros, a fall of 5% due to the Easter effect. The decrease would have been 1.5% without the Easter effect.
  • Non-digital advertising revenues were down by 11%.
  • Events grew by 7.2% to 1.7 million euros.
  • Noteworthy cost control, with expenditures seeing a -6% drop.
  • The implementation of efficiency measures, following the agreement with third parties for the printing of newspapers, and the announcement of the closure of the printing plants will continue to generate savings throughout the year.
  • For the rest of 2018, an improvement in margins is expected despite the fall in revenues.

 

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