HFM - Lagardère

Hachette Filipacchi Medias
INVESTOR DAY
PARIS
FEBRUARY 2, 2004
HFM: in a nutshell…
Ô The world leader in consumer magazines.
Ô 2002 consolidated revenues: 2156 M€.
Ô 238 different magazines in 36 countries.
Ô Most important market positions:
n
n
n
n
n
N°1 in France,
N°1 in Spain,
N°4 in the US,
N°3 in Italy,
Local actor in the most important markets in the world.
Ô 57% of total revenue generated outside France, (64% of magazine activities)
Ô Headcount: 7500 people.
2
HFM: a consistent strategy
Ô HFM is unique:
l
We are global thanks to ELLE and to our other international brands,
AND
l
We are local thanks to acquisition and/or launches country by country,
AND
l
3
We control our business in all major markets (except one)
HFM: a global presence
Controlled subsidiaries
Joint venture
Licence
4
238 Magazines in 36 Countries
HFM: Business organisation
P.Bellanger
Corporate
Corporatefinance
finance
HFM
AM Couderc
Magazine in France
(PMF)
Ad sales company PMF
JP Denfert Rochereau
Magazine International
(PMI)
Daily Press
Ad sales company PMI
Ad sales company PQ
Ô Four main lines of business
5
P. Zagdoun
O. Chapuis
Interdeco
Ad sales company
HFM: Measuring the performance
Ô Overall performance
Ô Benchmarking
Ô Profitable acquisitions : the Japanese and Italian examples
6
HFM: a profit driven Publisher
EBIT x 19
Cagr= 14,4%
Ô Three periods of time:
Ô 1980-1988, beginning of
internationalisation process,
Ô 1989-1997, Priority is given to
international launches; Impact on Ebit,
Rev X 8,4
Cagr=11,1%
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
7
Ô 1998-2002, Revenue growth
consolidation and EBIT Growth
acceleration.
Rapid revenue growth from a strong base
1997-2002 EBIT growth (publishing only)
HFM
Emap
Mondadori
Ô Within the benchmark:
n
n
HFM has the most important revenues in magazine
HFM creates the most important volume of new revenues each year.
Ô Pertinent data not avalaible for G+J
8
Ô
Ô
Ô
Ô
Exchange rates stable through 1997 / 2002
HFM : Non strategic businesses deducted: Printing, Radio, posters,
Revenues calculated according to international GAAP
EMAP : without Petersen, magazines only
1997-2002: EBIT growth (normalised perimeter)
1997-2002 EBIT growth (publishing only)
HFM
Emap
Mondadori
Ô Within the benchmark:
n
n
Ô
Ô
Ô
Ô
9
HFM has the most important EBIT in magazine
HFM creates the most important volume of new EBIT each year.
Exchange rates stable through 1997 / 2002
HFM : Non strategic businesses deducted: Printing, Radio, posters,
Revenues calculated according to international GAAP
EMAP : without Petersen, magazines only
HFM: high margin level with some upside
Examples of magazine division profitability in 2002
16,3%
16,2%
11,8%
9,4%
Emap
Time
Warner
HFM
G+J
6,5%
6,0%
6,0%
RCS
sanoma
Burda
Ô Margin pickup at HFM: almost 0,50% per year over the last five years
Ô Actually, data are not strictly comparable since TW and Emap are deeply concentrated in
two countries.
10
Sources: annual reports, HFM (S1/03+S2/02) international GAAP,Bank studies
Hachette and Emap: Magazine houses
Comparisons of HFM and Emap
20,0%
15,0%
10,0%
5,0%
0,0%
Emap UK
HFM UK
Emap France
HFM PMF
Emap internatl
HFM inter (hors
UK)
-5,0%
Ô Margin gaps in France and in UK tend to decrease.
Ô Excluding launch costs in 2002, EBIT margin for HFM France would exceed 15%
Ô HFM has developped a powerful and profitable international network.
11
HFM: Profitable acquisitions
Ô HFM acquisitions : Main characteristics
n
n
n
n
Medium size companies (versus structuring)
« sleeping beauties » vs « market share »
Strong potential of synergies with HFM at various levels
High ROI and reasonable prices measured through a multiple of revenues.
Acquisition multiple
ROI
12
Fugin-Gaho
Japan
Rusconi
Italy
0,7 X Rev
17%
1,1 X Rev
10%
HFM: division presentation
13
Ô Olivier Chapuis:
HFM approach to the advertising business
consolidation: the other network.
Ô Jean Paul Denfert Rochereau
Expanding in mature and in emergent countries:
monitoring the different challenges of a global
expansion
Ô Anne-Marie Couderc
Defining a new strategy for homeland
Ô Philippe Zagdoun
regional dailies and supplements
As a conclusion….
Ô Strategical axis
Ô
Ô
Ô
Ô
Internationalisation
Segmentation
Size and Power
Time
Financial impact
Increased growth
Higher profitability
Higher Cash flow
Return on investment
Ô Our strategy enables HFM, year after year, to increase our profitability,
that is to say our contribution to Lagardère’s shareholder.
14
2003 Advertising review
2004 Forecasts
15
Worldwide results - Key figures
Ô Advertisers in the world’s top 9 countries investments :
230 billion euros
USA : 135
EU7 : 60
JP : 35
308 billion euros worldwide
16
Worldwide results - Key figures
Ô The US alone accounts for some 60% of the global market
Europe
25%
Europe
USA
Japan
Total
US
60%
Japan
15%
17
2002
26.4%
58.2%
15.4%
100.0%
2004
25.7%
59.4%
14.9%
100.0%
Worldwide results - Key figures
Ô UK and Germany account for more than 50% of all European investments
SP
10%
SW PO
3% 2%
DE
26%
IT
15%
FR
17%
18
UK
27%
Worldwide results - Spending mix on key markets
Ô Dailies and TV are smaller in Europe than in the US and in Japan
Ô Magazines are much stronger in Europe
14%
20%
46%
11%
49%
4%
9%
Total 9
10%
24%
13%
Japan
12%
21%
4%
15%
47%
USA
20%
17%
6%
41%
16%
Europe 7
0%
20%
Magazines
19
Source : Ad’Barometer/Interdeco
40%
Dailies
60%
Television
80%
Radio
100%
Others
European results – Country shares
Ô Europe :
8.4 billions Euros
invested in consumer magazines
Spain
6%
Poland Sweden
2%
1%
Germany
31%
Italy
14%
Ô Three countries account for
a major market share.
France
20%
UK
26%
20
Forecasts
21
Worldwide results
Key market data : major media advertising worldwide
Europe : 2,5
US : 4,1
Japan : 1,2
2003
2003
2002
2002
+ 0.1
224 billion €
22
+ 1.7
228 billion €
2004
2004
+ 3.2
235 billion €
Worldwide results
Key market data : major media advertising worldwide
Global expenditure (1999-2004)
Million euros
Million euros
560 000
260 000
Global advertiser expenditure (medias,
internet, below-the-line) (left scale)
540 000
540 bn€
250 000
520 000
240 000
500 000
235 bn€
228 bn€
480 000
460 000
230 000
Major medias (TV, press, radio,
outdoor, cinema) (right scale)
440 000
220 000
210 000
420 000
400 000
1999
23
200 000
2000
2001
2002
2003
2004
Worldwide results
AD/GDP ratio
24
Minimum
Maximum
2004
France
0.66
0.76
0.66
Germany
0.70
0.91
0.73
UK
0.93
1.14
0.93
Europe 7
0.74
0.85
0.74
Japan
0.60
0.91
0.85
USA
1.15
1.34
1.16
2003 / 2004 : the growth in HFM advertising revenue
is generally higher than that forecast for magazines
10%
5%
Magazines 03
0%
HFM E03
-5%
Magazines Market forecasts 04
-10%
-15%
France
Spain
Italy
UK
US
Japan
Countries
Magazines 03
HFM E03
Magazines Market forecasts 04
France
Spain
-1,9%
-1,5%
1,6%
0,5%
1,2%
2,2%
Italy
UK
-1,3%
1,4%
-1,5%
5,2%
1,4%
3,2%
US
3,3%
4,8%
2,6%
Japan
-0,1%
6,5%
1,2%
25
Source Ad Barometer
Major trends 2000-2010 :
Globalization and fragmentation
26
Globalization
27
5 OR 6 MAJOR INTERNATIONAL CORPORATIONS BY SECTOR
Ô Cosmetics and Fashion :
L’Oréal, Lauder, LVMH, Chanel, Beiersdorf
Ô Automobile :
GM, Ford, Toyota, Daimler, VW, Renault, PSA
Ô Telecom :
Microsoft, HP,Vodafone, IBM, France Telecom
Ô Food :
Nestlé, Danone, General Mills, Coca, Mars, Pepsi
28
A growing trend toward more centralization and consolidation
Ô Top twenty worldwide advertisers (55 billion euros) = 20% of the
worldwide advertisers
Ô The top seven media agencies (160 billion dollars) = 60% of the
worldwide advertising expenditures :
n
Starcom/Zenith Media, Magna Global, Mindshare/CIA, Omnicom, Aegis,
Mediacom, MPG
Ô HFM : top twenty five worldwide advertisers (250 millions euros) = 25%
of HFM global advertising revenue (1,075 billion euros net)
The key strategic significance of international
advertising business
29
The only truly global organization
Brands, readership contracts and consistent targets
36 editions
5 400 000 copies / month
20 000 000 readers/month
18 editions
1 600 000 copies/issue
7 000 000 readers/issue
6 editions
400 000 copies/issue
More than 2 million readers/issue
10 editions
3 700 000 copies/issue
More than 16 million readers
14 editions
3 million copies/month
+ 20 million readers
An universal editorial concept
Network
30
A policy for advertising harmonization among the
top 25 key accounts
Some 250 million euros are at stake
♥ L ’OREAL ♥ LVMH ♥ PROCTER & GAMBLE ♥ GENERAL MOTORS ♥ ESTEE LAUDER ♥ PPR (YSL - GUCCI) ♥ FORD
♥ CHANEL ♥ DAIMLER ♥ UNILEVER ♥ NISSAN ♥ TOYOTA ♥ VIVENDI ♥ BEIERSDORF♥ 123 MULTIMEDIA ♥ NESTLE ♥ HONDA
♥ VW ♥ ALTRIA GROUP ♥ AUCHAN♥ The SWATCH GROUP ♥ PSA♥ JOHNSON & JOHNSON♥ TROIS SUISSES ♥ BMW
31
A strengthened position in the main advertising world markets
FRANCE
N°1
ITALY
N°3
31%
All titles
UK
N°6
13%
7%
All titles
All titles
15%
23%
33%
Source Secodip
Women’s
mags
Acquisition of Rusconi
Source AC Nielsen
SPAIN
N°5
14%
Acquisition of Attic Futura
US
20%
UC Hachette
21%
2002
N°1
JAPAN
non- japanese
16%
All titles
Acquisition
of Fujingaho
Women’s
mags
Source Infoadex
Source MMS
Takeover of Elle and Red
Takeover of Elle and MarieClaire
N°1
32
Women’s
mags
Women’s
mags
24%
Women’s
mags
Source LNA
Source TNS Secodip
Fragmentation
33
Ô Audience fragmentation
n
n
a ramp up of special interest channels
Internet development
to the detriment of major
networks
Ô In this context, Magazines
n
n
are fully capitalizing on this trend because of their ability to target
customers
and can prevail
the 10 most powerful magazines : 82% penetration
l he 10 most powerful TV commercials : 66% penetration
l
Ô Ex : In France, Femina : 4 million copies – T7J : 2 300 000 copies - TV Hebdo : 1 800 000 copies
34
New media, which are complementary to magazines,
do not have an impact on magazine readership
110
100 100100 100100
100
104
103
102
98 98
106 104107
99
110
107
107
106
98
106
98
106
108
106
98
90
80
70
60
50
1998
Sources: ABC (US),ABC (UK), ADS
(Italy),OJD (Spain), OJD ( France)
35
1999
2000
2001
US
UK
Italy
Spain
2002
France
Consumers do not choose between old
and new media,
but between mass and segmented media
The leading and trendiest individuals
are heavy magazines readers as well as
being new media enthusiasts
36
Magazines have a bright future
37
Presse Magazine France
Magazine publishing France
Strategy presentation
HFM in France: a brand strategy
Ô Centered on three main areas:
39
n
Enhancing our position as French market leader for magazines
n
Focusing on our core business
n
Building up consistent magazine families around our flagship titles
1. Enhancing our position as French market leader in magazine
publishing
PMF is the leader on the French market
Distribution market share 2003
Advertising market share 2003
(source : OJD)
(source : Secodip)
25,0%
19,00%
18,00%
17,00%
20,0%
15,0%
16,00%
15,00%
10,0%
5,0%
14,00%
13,00%
n
Marie-Claire
Régie Obs
Prisma
EMAP
Grpe Figaro
(magazines)
EMAP
Prisma
*
PMF
0,0%
PMF
n
The French magazine publishing market is a very creative market, characterized by
lively competition and the presence of all major international groups
* Excl. Magazine supplements TV Hebdo (1,800,000 copies) and Version Femina (3,600,000 copies)
40
Top titles in each segment
LIFESTYLE
MARCHE ART
MAGAZINES
DE VIVRE
UPSCALE
MARCHE
WOMEN'S
DES FEMININS
MAGAZINES
Hors suppléments
( Diff
cumulée
annuelle)
Exl supplements
(Total
annual
circulation)
200 000
180 000
160 000
140 000
120 000
100 000
80 000
60 000
40 000
20 000
0
20 000 000
15 000 000
10 000 000
5 000 000
Journal de la
Maison
0
Elle
M. Claire
Cosmopolitan
Biba
M. France
FAMILY
MAGAZINES
MARCHE DES
FAMILIAUX
Elle Déco
M. Claire
Maison
Maison
Française
Coté Sud
Maison md
Figaro
MARCHE
DES MENSUELS
ET BIMENSUELS
MONTHLY
& BIMONTHLY
AUTOMOBILE
MAGAZINES
AUTOMOBILE
400 000
350 000
350 000
300 000
300 000
250 000
250 000
200 000
200 000
150 000
150 000
100 000
100 000
50 000
50 000
0
Parents
Top Famille
Enfants
Famili
0
Auto Moto
41
Source : Diffusion Contrôle. Diffusion Totale 2002-2003
100% HFM
HFM shareholder & operational
Partnership
Competition
Automobile Magazine
Auto Journal
Top titles in each segment
NEWS MAGAZINES
TV
MARKET
MARCHE TV
800 000
2 500 000
600 000
2 000 000
1 500 000
400 000
1 000 000
200 000
500 000
0
0
Paris Match
L'Express
Nouvel
observateur
Le Point
VSD
Télé 7 jours
Courrier
International
Télé Z
MARCHEMAGAZINES
DES MASCULINS
MEN'S
Télé Loisirs
Télé Star
Télé Poche
PEOPLE PRESS*
600 000
600 000
500 000
500 000
400 000
400 000
300 000
300 000
200 000
200 000
100 000
100 000
0
France DIMANCHE
0
Entrevue
42
(*) : Source éditeur
FHM
Maximal
Max
Men's Health
Newlook
100% HFM
HFM shareholder & operational
Partnership
Competition
VOICI
ICI PARIS
POINT DE VUE
OH LA
*
(*) : Source éditeur
2. Focusing on our core business
n
The sale of industrial activities has enabled us to put in place profitable contracts
n
The merger of Hachette and Filipacchi Groups in 1997 has multiplied synergies
n
These 2 factors combined have to accelerated the reduction in structure overheads
from 2000 onwards
STRUCTURAL OVERHEADS
102
100
98
96
94
92
90
88
86
84
82
-11%
1998
43
1999
2000
2001
2002
2003
3. Building consistent families of magazines around strong brands
Ô Over the past 20 years, the French branch has achieved through
efficient management a sound and development of its historical titles
(1945)
(1969)
Ô Synergy and marketing
Ô Spin-offs and families
Ô Internationalisation
44
(1960)
(1946)
(1948)
(1977)
(1934)
Scaling up from a foundation of historical titles with diversified
revenue streams
Margins trend
(baseline 100 in 1997)
250
200
150
100
Diversified revenues steams
50
20
03
20
01
19
99
19
97
19
95
19
93
19
91
19
89
0
Advertising
15%
Subscribtion
15%
45
News stands
54%
Building consistent families of titles
Ô Since 1997, our portfolio has developed through:
n
Launches:
l
l
l
l
l
l
l
l
l
l
46
Elle à Table,
Isa,
Bon Voyage,
Maximal,
Match Belgium
Princesse
Witch
Winnie Lecture
Campagne Déco
Public
Building consistent families of titles
Ô Acquisitions:
n
n
n
n
Journal de la Maison,
Mon Jardin Ma Maison,
Zurban,
Hola
Ô Spin offs:
n
n
n
n
47
Match en Chine
Première
Entrevue Choc!
…
Building consistent families of titles
A brand strategy
TV
Youth
News
People
Historical
titles
Choc
Women's
Men's
48
Leisure
HFM in France: What strategy for tomorrow?
49
n
Continue to improve our profitability
n
Maintain the annual investment necessary for our portfolio renewal
n
Focus on editorial creativity and marketing innovation
n
Pursue a strategy of targeted and opportunist growth by acquisition
and launches
Best of 2003
Record year for Paris Match
Paris Match No. 1 French weekly news
magazine (777 000 copies)
Best growth in paid France sales for 20
years (close to 5%)
50
ELLE : 1st French magazine for advertising revenue
ELLE elected
Magazine of the year 2003
51
ENTREVUE wins OJD Etoile d'Or
Entrevue wins OJD "Etoile d’Or"
award for highest total paid circulation
(in absolute value terms) with over
600,000 copies
Entrevue is the unrivalled leader in
men's magazines
52
HFM
Regional Dailies & Supplements
02/02/2004
Evolution of the Equity investment held by HFM :
In 1981
2003
1990
*
Operator
Minority
also holds the national
* LedailyParisien
"Aujourd'hui en France".
Total Circulation 500 000ex
54
HFM's regional dailies and supplements branch
A very efficient ad sales company
Ô The dailies use the service of a local ad sales company (EUROSUD,
owned at 100% by HFM) which has excellent results in the sector
Compared percentage of Growth 1999-2002
25,00%
20,00%
15,00%
EUROSUD
10,00%
5,00%
Market's
average
0,00%
Growth 1999-2002
55
Source : SPQR (French Regional Dailies' Organization)
HFM's regional dailies and supplements branch
HFM has been a great innovator in the dailies' market by introducing
new business models :
Ô Created the supplements, TV Hebdo and Version Femina, sold to French dailies
(outside or within HFM)
Ô Launched Marseilleplus, a free editorial daily newspaper which complements La Provence
in terms of
editorial content and readers
n advertising revenues
n
56
HFM's regional dailies and supplements branch
n
57
Publisher of 6 millions copies each week with the women and
TV supplements :
VERSION FEMINA :
First European weekly women magazine
4 millions copies each week
Distributed with 38 dailies
TV HEBDO :
2 millions copies each week
Distributed with 15 dailies
Evolution of our women supplement's turnover since 1997
TURNOVER (K€)
60 000
50 000
40 000
30 000
20 000
10 000
0
1997
1998
1999
Sales
58
2000
2001
Advertising
2002
2003
HFM's regional dailies and supplements branch
HFM has been a great innovator in the dailies' market by introducing
new business models :
Ô Created the supplements, TV Hebdo and Version Femina, sold to French dailies
(outside or within HFM)
Ô Launched Marseilleplus, a free editorial daily newspaper which complements La Provence
in terms of
editorial content and readers
n advertising revenues
n
59
Employees in the daily Regional Press since 1997
2100
Acquisition of
Nice Matin
2000
35 hours law
1900
1800
1700
Dailies'
restructuring
1600
Launch of
Marseilleplus
1500
1997
60
1998
1999
2000
2001
2002
Compared Profitability of the French Regional Dailies' actors
in 2002
10%
9%
8%
7%
6%
5%
4%
(…)
3%
2%
61
Ratio EBITDA (without extraordinary items)/Turnover Source GGR 2002
Le Progres
Sud Ouest
Market's
Average
Dépêche
Voix Du Nord
HFM
Ouest
France
0%
Nouvelle
Republique
(…)
1%
Ratio of operating income on turnover
in the HFM's Dailies and supplements since 1997
Operating Income / turnover (%)
10%
8%
6%
4%
Mid-Term Target is
a 10% ratio
2%
0%
-2%
-4%
-6%
-8%
1997
62
1998
1999
2000
2001
2002