CIR Compagnie Industriali Riunite : Gruppo Espresso: net results €24.6 mn (€4.6 mn in 2014)

- The Board of Directors of Gruppo Editoriale l'Espresso S.p.A. met today in Rome under the chairmanship of Mr Carlo De Benedetti and approved the consolidated results as of September 30 2015 presented by Chief Executive Officer Monica Mondardini.

Performance of the market In the first eight months of 2015 overall advertising investment (Nielsen Media Research figures) declined by 2.3% compared to the same period of 2014. This trend was the same as that recorded in the previous year, which closed with a decline of 2.5%.
All of the media, with the sole exception of radio, reported declines: television (-2.7%), the printed press (-6.2%) and the internet (-2.1%, excluding the Search and Social Network sectors). By contrast, radio reported significant growth (+9.7% on the same period of last year).
As far as advertising in the printed press is concerned, the decline (-6.2%) was less than that of last year (-8.5% for the whole of 2014): more specifically, the loss reported by the local press was -4.5% (-7.9% in 2014) while that of the national press was -7.2% (-8.8% in 2014). As for circulation, ADS (Accertamento Diffusione Stampa) figures for the period from January to August 2015 show a decline in sales of daily newspapers of 9.4%, which is in line with the trend recorded in 2014.

Performance of the operations of the Espresso group in the first nine months of 2015 The Group closed the first nine months of 2015 with a positive net result of €24.6mn. The consolidated revenues of the Group, amounting to €439.6mn, declined by 5.6% compared to the first nine months of 2014 (€465.8mn). Circulation revenues, which came to €166.0mn, were down by 5.6% on the same period of last year (€175.8mn), in a market which, as stated above, has continued to suffer a significant decline in the circulation of daily newspapers (-9.4%). Based on the most recent ADS figures (August 2015), la Repubblica confirms its ranking as the top newspaper in terms of copies sold on the newsstands, by subscription and through other, and based on Audipress figures (Survey 2015/II), reported 2.3 million readers per day of the traditional edition. The local daily newspapers, which according to Audipress surveys, have an average of 2.8 million readers per day, reported a significantly lower decline in circulation than that reported by the sector as a whole. Lastly, in the current year the digital editions of the Group titles have had an average of 93 thousand subscribers. Advertising revenues posted a decline of 4.4% with contrasting trends: advertising orders for the printed press reflected the still negative trend of the market while radio and the internet showed positive dynamics. Radio grew by 6.1%, with Radio Capital and m2o posting double-digit growth. The internet showed an opposite trend to that of the market, posting growth of 2.8%, underpinned partly by the confirmed position of leadership of Repubblica.it, whose Total Digital Audience consists of 1.5 million unique users per day, with a lead of 26% over the number two website. The audience figures of the local newspaper websites were also positive, reaching an average Total Digital Audience of 410 thousand unique users per day. Costs went down by 6.6% and the decline was greater than that of revenues. More specifically, industrial fixed costs decreased (-12.4%) thanks to the continuation of the reorganization of the Group's production structure, logistics and distribution costs went down (-5.9%) thanks to the rationalization of transportation, and operating and administrative costs declined (-2.2%), thanks to the measures adopted to cut labour costs and overheads. The consolidated gross operating margin came in at €40.9mn compared to €41.8mn in the first nine months of 2014. The consolidated operating result came to€29.9mn, which was in line with the same period for the previous year (€30.0mn). By business area, newspapers held up overall in terms of profitability, while radio recorded growth. Financial expense declined from €9.8mn in the first nine months of 2014 to the current €6.5mn, thanks to the reduction of the debt and to the new funding programme put in place during the year 2014. During 2015, the sale of the television channel DeejayTV to Discovery Italia was completed, giving rise to a capital gain of €9.5mn. The consolidated net result was €24.6mn, versus €4.6mn in the first nine months of 2014. Even excluding the net capital gain realized (€9.5mn), net income rose significantly to €15.1mn, thanks to the fact that the results of the core business held up well, despite the still critical situation, and thanks to the reorganization of the television business (whose contribution to the consolidated net result, excluding the above-mentioned capital gain, increased from -€2.4mn to +€1.5mn), and to the reduction of financial expense and the lower tax liability. Consolidated net debt stood at €8.1mn at September 30 2015. The financial surplus for the period came to €26.1mn, of which €12.0mn was generated by the sale of All Music (it should be noted that in the period the Group received repayment of the shareholder loan of €21.3mn granted to Persidera and incurred extraordinary charges for restructuring of €21.8mn). The Group had 2,216 employees,including temporary contracts, at the end of September and the average number of employees in the period was 4.7% lower than in the first nine months of 2014. The performance of the third quarter confirms the trends already encountered in the first half of the year. Consolidated net revenues fell by 6.4% with advertising orders posting a decline of 6.1%. The consolidated operating result came to €6.3mn versus €6.9mn in the third quarter of 2014 while the consolidated net result was €2.5mn. Main events that have taken place since the close of the first nine months of the year and outlook for the rest of the year During the year 2015, the evolution of the sector remains critical and is substantially the same as that of the previous year. The circulation of daily newspapers and magazines has reported a decline in line with that of 2014. The advertising market, as a whole, has still been showing a recessive trend and to date there have been no signs of a recovery. Despite this, the evolution of the various media is less negative for the Group taking into account the improving rate of declining in advertising orders of the printed press and the recovery of the radio sector. It should be noted that the Group has a clear advantage in the internet sector compared to the market. As for the outlook for the whole year, the Group should reasonably be able to achieve a better net result than that of last year, even excluding the capital gain reported.