Release Date: September 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MFE-MediaForEurope (WBO:MFE2, Financial) reported an 8% increase in consolidated revenue compared to the previous year, driven by better-than-expected advertising collections and excellent performance in other revenue streams.
- The company achieved a 13% growth in EBIT and a 20% increase in net profit, showcasing strong financial performance.
- MFE-MediaForEurope's cross-media approach has led to a significant increase in clients investing in multiple media platforms, with Italy seeing a rise from 66% in 2019 to 78% in 2023, and Spain from 30% to 70% in the same period.
- The integration process between Italy and Spain has been successful, with cost synergies expected to be fully realized by the end of 2024 and revenue synergies anticipated to exceed initial targets in the coming years.
- The company's digital strategy is yielding positive results, with significant growth in digital inventory and higher revenue per hour for digital content compared to linear content.
Negative Points
- The advertising market visibility remains low due to geopolitical instability, including conflicts in Ukraine and the Middle East, as well as the upcoming US presidential election.
- The last quarter of the year is expected to be challenging, especially in Italy, due to strong advertising revenue performance in the same period of 2023 and the absence of Champions League broadcasting rights.
- Despite the positive economic outlook in Italy and Spain, fluctuations in consumer confidence indices pose a risk to future performance.
- The OTT (over-the-top) platform penetration in Italy and Spain shows a paradox of high penetration but low time spent viewing, indicating a structural constraint on OTT offerings.
- Inflation and increased labor costs in both Italy and Spain have put pressure on maintaining cost control, despite the company's efforts to manage expenses efficiently.
Q & A Highlights
Q: What should we expect for the advertising outlook for the last few months of the year?
A: Matteo Cardani, Managing Director of Publitalia, noted that the advertising market visibility remains low due to geopolitical instability and macroeconomic fluctuations. Despite strong performance in the first nine months, the last quarter will be challenging due to the absence of Champions League broadcasting rights and a strong comparative period in 2023.
Q: What level of cash flow generation should we expect for the full year?
A: Marco Giordani, Chief Financial Officer, estimated that the full-year free cash flow would be between EUR300 million and EUR350 million, depending heavily on the performance of the advertising market in the last quarter.
Q: Can you provide an update on the process of selling non-core assets?
A: Marco Giordani stated that the company is focusing on its core business and is in the process of disposing of two non-core assets. However, no additional information was provided beyond what was disclosed in the last conference call in August.
Q: Can you elaborate on the difference between OTT estimates in Italy and Spain?
A: Matteo Cardani explained that the difference is mainly due to the age structure of the population and digital device penetration. Italy has an older average age and lower digital penetration compared to Spain. Despite high OTT penetration, the time spent on these platforms is relatively low, indicating that traditional broadcasters still play a crucial role in effective communication plans.
Q: What synergies have been achieved so far from the integration with Spain?
A: Marco Giordani mentioned that cost synergies will be completed by the end of 2024, and revenue synergies are expected to be realized over the next two years. The collaboration between Italy and Spain has also revealed additional commercial opportunities beyond the initially declared synergies.
Q: What is the immediate strategy for digital content, and are there plans for additional investments?
A: Matteo Cardani highlighted that the company is focusing on leveraging its cross-media and cross-country portfolio to accelerate digital content creation and distribution. The integration between Italy and Spain is progressing well, with both teams collaborating on a common data and technology platform.
Q: Can you elaborate on the advertising trends you see in October?
A: Matteo Cardani noted that early signals for October are positive, but visibility remains limited. The company expects a rebalancing of the Q4 weight, especially in Italy, due to the absence of Champions League rights and a strong comparative period in 2023.
Q: What are the key financial highlights for H1 2024?
A: Marco Giordani reported that consolidated revenue was up almost 8%, EBIT grew by 13%, and net profit increased by almost 20%. The group generated EUR241 million in cash, significantly improving its net financial position.
Q: How is the company performing in terms of cost management?
A: Marco Giordani stated that total costs are better than budgeted and fully aligned with guidance. The company is managing its cost base efficiently, adapting costs in relation to revenue evolution.
Q: What are the expectations for the full year in terms of revenue and costs?
A: Marco Giordani confirmed the guidance for full-year consolidated other revenue at EUR430 million and total costs at EUR2.560 billion. The company aims to maintain financial discipline and cost control despite inflationary pressures.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
