Another round in the ongoing battle around Lagardère
Bernard Arnault’s family group, Groupe Arnault, and LC&M, Arnaud Lagardere’s holding company, today announced a partnership that will see Arnault’s family group buying around 25% of the share capital of LC&M. This is likely to reduce the seemingly persistent financial difficulties of Arnaud Lagardère (his 7.26% stake in Largardère SCA is used as collateral for personal loans) while Bernard Arnault might well be potentially interested in the Travel Retail division… The Lagardère story is far from ending…..
25 May 20
Going through a really dreadful period
Lagardère Q1 20 sales down 12.5% organically (Publishing:-3.3%; Travel Retail: -18%). The latter was impacted by COVID-19 from mid-February and decreased by 54% in March as the virus spread across the board. Despite corrective actions from April, the group is unable to provide any precise FY20e guidance, estimating Travel Retail recurring EBIT “in the region of 20% to 25% of the decrease in its revenue” and Publishing’s ” in the region of 35% to 40%”. We expect further downgrades to our forecasts.
30 Apr 20
Open battle around Lagardère
Amber Capital’s electoral campaign launched on 7 April against Lagardère produced chain reactions in the French business world ahead of the 5 May crucial AGM. Amongst the latest ones is the 10.6% stake taken by Vivendi in Lagardère, with no very clear targets at this stage….
22 Apr 20
Final days for a highly unfriendly legal structure?
The activist fund Amber Capital intends to push for major requests at the next AGM to be held on 5 May 2020. Among them are to renew the entire supervisory board, to reduce the costs of the holding company and simplify the group’s structure, to review the dividend policy and free up cash to develop the two core divisions (Travel Retail and Publishing).
27 Mar 20
Coronavirus fears overshadow globally in line FY19 results
According to the FY18 segment reporting (i.e. mostly before the Sports disposal), Lagardère reported globally in line FY19 results (organic revenue +4.1%), driven by its two strategic segments (Publishing and Travel Retail). Reported recurring EBIT margin was 5.2% but there was a net loss of €15m after discontinued operations. Dividend stable (€1.30/ share). FY20e guidance (recurring EBIT:+4-6% CER) highly uncertain due to the Coronavirus. Our forecasts will be cut to integrate the Sports disposal as well as the further adverse impact on Travel Retail from the Coronavirus.
28 Feb 20
Lagardère finally disposing of its Sports business
Lagardère has at last announced the disposal of its Sports division, in line with the strategic refocusing on Publishing and Travel Retail announced in FY18. The disposal price is far below our NAV estimate and a write-down will have to be booked, but we consider that getting out of this disappointing business is good news for the group.
16 Dec 19
Sound Q3 19 organic revenue trends for the target scope
Lagardère reported Q3 organic revenues growth of +4.1%, driven by its two strategic segments (Publishing and Travel Retail), i.e. a sound +5.7% (target scope: +4.9%) for the 9 months period. The group also reiterated its recurring EBIT growth guidance of 4-6% at CER, based on the target scope. An in line trading statement with no major changes anticipated to our forecasts.
07 Nov 19
Travel and football uphold a solid H1
Strong top-line performance from its flagship growth driver, Travel Retail, coupled with an eventful sporting calendar for Sports and Entertainment mark a satisfactory first half of the year for Lagardère. The group carries on with its strategic refocusing around its two flagship divisions (Publishing and Travel Retail) through recent moves concerning its disposal of the remaining television assets and a new add-on acquisition in the duty free space.
26 Jul 19
Strategic refocusing plan in progress
Continuing efforts on the refocusing plan around Travel Retail and Publishing through acquisitions and sales, Travel Retail sales started to lose momentum in Q4 18, Lagardère Publishing and Lagardère Sports and Entertainment are facing a contracting business cycle.
07 Feb 19
LIBERUM: Lagardère - Loss of AFC rights signals potential sale of Sports & Entertainment
In our view the loss of the Asian Football Confederation rights could trigger a disposal of the Sports and Entertainment unit in the near term. On a 10x EBITA multiple the business could generate c.€210m that could be redeployed in growth and cash-generative assets. A disposal of the S&E division would also drive up group EBITA margins, a KPI for management incentivisation. We view June 26th, the date of the trial re the Confederation of African Football as a next catalyst.
25 Jun 18
LIBERUM: Lagardère - Sale of magazine portfolio in France
Following the sale of its Eastern European Radio assets yesterday, Lagardère announced today the sale of a portfolio of magazines in France. We view the transaction as positive but keep the HOLD as we believe these portfolio actions had already been reflected in the share price and believe the group's strategy of selling underperforming assets and invest the proceeds in the more cash generative and growth assets is the right one.
18 Apr 18
LIBERUM: Media - Updating forecasts and target prices
We update forecasts for several Media names, with a number of target price changes although no changes to recommendations. We see Rightmove as offering comfort and security in an uncertain UK environment while Wolters Kluwer offers the same ex-UK although the valuation suggests little upside. While we think the management of both DMGT and Moneysupermarket are making the right moves, we still are cautious about how long it will take for their policies to bear fruit. In Europe, we keep a BUY on RTL - our preferred German broadcaster and reiterate our view that upside is all priced in at Lagardère. In the UK SMID cap space, exhibitions company Tarsus remains a favourite name.
MMB RMV WKL MONY RTL RTL TRS DMGT
15 Mar 18
Unexciting FY17 and headwinds anticipated for FY18e
No surprises, with FY17 profitability pretty much in line with the recent trading update. The outcome confirmed that Travel is not only the driver of growth but also the earnings’ one. In addition to the current difficulties within its media portfolio, we wonder if Lagardère will still be a media company in the short to medium term as some disposals on this side appear to be in the pipeline (Elle magazine apparently being at the forefront).
12 Mar 18
LIBERUM: Lagardère - How much longer is too long
Our investment case suggests that Lagardère is a self-help story that can unlock value by disposing of weaker assets and investing in cash generative and growth assets. According to management indications 2018 is likely to be the next year for further portfolio adjustments. However, we believe 2018 actions are already priced in and believe that there are more attractive names in the media space for the year ahead. Downgrade to HOLD, with a new TP of €26 (from €30). The stock has an attractive 5% dividend yield.
02 Mar 18
Solid FY17 trading statement: on its way to reach its guidance
Lagardère yesterday released only a FY 17e trading update, which was globally in line with expectations. The yearly performances were strong thanks to the buoyant Travel division but also once again they emphasised the disparities within the group with two divisions lagging behind. Management confirmed the FY17e guidance, namely EBIT growth in the range of 5-8% on a comparable basis. No change to our forecasts.
09 Feb 18
LIBERUM: Lagardère - Q4 beats expectations, Travel Retail very strong
Lagardère posted 3.3% organic revenue growth for Q4 this morning, which is ahead of expectations at 2.4%. The beat was driven by Travel Retail which had another spectacular Q with 10.3% organic revenue growth and beat consensus expectations. The group also reiterated this morning its EBIT growth target of 5-8% growth for 2017 at constant exchange rates and excluding the impact from disposals of Distribution activities. Conference call at 8am UK time: Phone UK: +442071943759 PIN: 96391793#
08 Feb 18
LIBERUM: Lagardère - Next step in the self-help story - potential sale of press titles
Rumours have reappeared in the press that Lagardère would be in discussion with Mondadori and Marie Claire to merge their press assets into a new company that could generate up to a €1bn in revenues. Lagardère management has been actively restructuring its asset portfolio and Active (the division, which includes press) has been at the forefront since the early 2000s, which is why we believe such an agreement is plausible. The death of Marie Claire's majority shareholder in July 2017 might provide the catalyst for such a consolidation, which has previously appeared in various forms in the press.
03 Jan 18
No major changes on the horizon
Lagardère released Q3 17 revenues which were globally in line with expectations at €1.85bn, up 2% on a lfl basis, mainly supported by a buoyant Retail Travel division (+7%). On a reported basis, revenues declined by 6.3%, mainly reflecting the press distribution’s disposal. Based on the current group’s operational trends and the outlook for the end of year, management remains confident it can deliver its previous guidance of 5-8% EBIT growth for FY17e on a lfl basis and at CER.
22 Nov 17
LIBERUM: Quarto* - Read-across from Hachette Publishing CMD
On Monday Hachette (Lagardère's Publishing arm) held a Publishing Capital Markets Day in Paris. We learned that bolt-on M&A is indispensable for Lagardère's day-to-day business. Management suggested that M&A could be focused around the US where it is currently underexposed (and too front-list weighted according to management).
Lagardere SCA Quarto Group
14 Jun 17
FY16e recurring EBIT guidance raised
Lagardère reported Q4 revenues of €1,984m, down 2.9% and up 2.4% on an organic basis (supported by Travel Retail at +7.2%, i.e. validating its current strategy in this segment, and Sports at +11.6%, thanks to a favourable calendar effect in Asia and Africa, offsetting a soft Publishing: -1.4%). A satisfactory end to the year, even if slowing down, as expected and guided for by management, after the strong +6.1% of the last Q3 and +2.5% for the 9 months period, due to an unfavourable basis of comparison for Publishing (Q4 15 organic performance was +9.2%) and a poor market environment for Active (magazines’ contraction and poor advertising for radio activities. For FY 16, consolidated revenues reached €7,391m, up 2.7% and +2.5% on an organic basis (Travel Retail at +7.1%, Publishing at +2.5%, Sports at +1.5%). This is slightly lower than AV’s figures of €7,448m despite higher organic growth (+2.7% compared to our +2.3%) and due to some higher forex and disposals’ impact than we had anticipated. As a positive, the group, which only reported its sales figures, is revising upward its FY16 guidance for recurring EBIT to be up by 13% instead of “slightly above 10%” compared to FY15 at CER and excluding any impact from disposals in the Distribution activities.
10 Feb 17
So far so good
Lagardère has reported Q3 revenues of €1,976m, positively up 6.1% on an organic basis (+7% on a reported basis after +2.7% coming from perimeter impact and -1.4% from forex). The 9 months total revenues were up by 5% to €5,407m (+€257m), of which +2.5% organically. The group reiterated its FY16 guidance for recurring EBIT to be slightly above 10% compared to FY15 at CER excluding any impact from the Distribution activities’ disposals.
10 Nov 16
Still confident in its FY16 guidance
As usual, Lagardère’s H1 16 results were mixed, reflecting its conglomerate profile and various business models. Consolidated revenues were up €127m to €3,431m, i.e. +3.8% on a reported basis helped by a +4.6% perimeter impact (c.60% coming from the sole Travel Retail division). The organic trend, which appeared disappointing at first sight (only +0.5%), reflected an unfavourable calendar impact in sporting events (two major football championships held in H1 15). Excluding the latter, the like-for-like top-line growth would have been +2.4%, which we consider as a rather satisfactory performance with the tough environment weighing on the group’s growth engine (Travel Retail). As expected, and due to the calendar effect in sports (-€27m impact), the group’s recurring EBIT was down from €122m to €101m, i.e. a margin decrease of 80bp to 2.9%. Lagardère, nonetheless, reiterated its FY16 guidance for a recurring EBIT growth target “slightly above 10%” (at CER and excluding any impact from any disposal of the Distribution activities), considering an encouraging outlook for H2 16e and as the Sports calendar’s adverse impact is expected to be fully reversed. The H1 16 FCF generation was also reassuring at €47m compared to -€84m a year earlier.
23 Sep 16
Good start to the year and reiterated guidance
Lagardère reported Q1 16 consolidated revenues down 2% on an organic basis and +0.9% on a reported basis at €1,586m (+€14m). The latter benefited from a 3.4% net positive impact from acquisitions. Positively, the group confirmed its FY16e guidance for recurring EBIT growth “slightly above 10%” (at CER and excluding any impact from any disposal of the Distribution activities).
12 May 16
Full-year 2015 results overshadowed by Dominique D'Hinnin's departure...
Lagardère, which had reported in February €7,193m consolidated revenues, up 0.3% on a reported basis and +3% organic, published a FY15 recurring EBIT of €378m (+10.5% or +€36m mainly driven by Sports: +€16m and Active: +€6m), in line with our expectations and reflecting a 5.3% margin compared with 4.8% a year earlier. Adjusted net profit reached €240m (AV: €234m) and satisfactorily reported cash flow from operations at €627m up €273m from FY14. The proposed dividend per share is unchanged at €1.30. The group is cautiously guiding for a FY16e recurring EBIT growth slightly above 10% (at CER and excluding the disposal of the Distribution activities).
14 Mar 16
Mixed H1 results offset by improved guidance
This time supported by continued growth in Travel Retail and a favourable calendar effect in Sports (i.e. the African Cup and the Asian Cup), Lagardère H1 15 revenues rose by 2.9% organically (-1.8% reported to €3,304m, after a negative perimeter impact of €277m and a positive €130m forex). Q2 organic growth reached only +0.4%, the only positive trend coming from the strategic Travel Retail business (+3.7%). Although the Sports division saw its margin boosted from 3.3% to 12.4%, it was insufficient, regarding the small size of the business (only c.8% of group sales), to offset the decline in profitability from the other activities. On the whole, the group's operating margin therefore only slightly improved (+40bp to 3.7%). Positively, Lagardère nonetheless raised its FY15e recurring EBIT growth from +5% to +7%, at CER and excluding the potential disposal of the LS Distribution business (a negative €15m impact so far).
11 Aug 15