UPDATE: Lagardere Sees Profit Bouncing Back In 2011
March 09 2011 - 2:24PM
Dow Jones News
French media group Lagardere SCA (MMB.FR) Wednesday said it
expected profits to bounce back in 2011, a year in which it aims to
refocus its main media assets.
For 2011, Lagardere expects operating profit from its media
divisions to grow around 10% in 2011, a guidance that is based on
the group's structure as of Jan. 1, so includes the international
magazine assets it is in the process of selling to U.S. media giant
Hearst Corporation, and excludes currency changes.
Chief Executive Arnaud Lagardere recently pledged to prune its
portfolio of businesses and create a more focused conglomerate. As
part of that process, the company earlier this year received a firm
offer from Hearst for its international magazine business,
including the publishing rights for fashion magazine Elle. The deal
should close sometime before the end of the year, Chief Financial
Officer Dominique D'Hinnin said.
Lagardere also wants to sell its 20% stake in Vivendi SA's
(VIV.FR) pay TV Canal Plus France via an initial public offering, a
process the group is determined to see through "whatever the case,"
CEO Lagardere said at a press conference, adding that Vivendi had
failed to make an acceptable offer for the stake.
Arnaud Lagardere added that the group may only list part of the
20% stake and let the market set the price before going back to the
negotiating table with Vivendi.
The price range for the IPO will be known on March 23, CFO
D'Hinnin said.
As the group is shifting away from print media, it also has an
ambitious project to turn its sports marketing division into a
global leader. The sports business is, however, highly cyclical
with revenue linked to big events such as the Olympic Games or
soccer World Cup. As a result, analysts question whether Lagardere
can build a sports business with enough scale and reach to ride out
the lulls in the sporting calendar.
Lagardere said net profit for 2010 was EUR163 million up from
EUR137 million in 2009, and is provisional based on a book
valuation of EUR1.51 billion for its 20% Canal Plus France stake,
for which the valuation could still change as the process is
ongoing.
Lagardere said it will determine the final amount of the
dividend to be paid for 2010 once the final financial results are
published, but CEO Lagardere said the idea is to keep the dividend
stable at EUR1.3 a share.
Operating profit for the full year from Lagardere's principal
media activities, which is the main focus for analysts, rose 1% to
EUR468 million in 2010, driven chiefly by the recovery in
advertising revenue. This figure beat an average EUR466.3 million
forecast by four analysts polled by Dow Jones Newswires.
Lagardere last month already reported a 0.9% rise in revenue to
EUR7.97 billion.
In addition to press and broadcasting activities and sports
marketing, the Paris-based group also has airport duty-free stores
and publishes books, including the famous Stephenie Meyer Twilight
Saga.
Besides the IPO of its stake in Canal Plus France, it has said
repeatedly that it would also like to sell its 7.5% stake in
European Aeronautic Defence & Space Co. NV (EAD.FR).
Lagardere shares Wednesday closed at EUR32.78.
-By Ruth Bender of Dow Jones Newswires and Max Colchester of the
Wall Street Journal; ruth.bender@dowjones.com,
max.colchester@wsj.com