Today, the meeting of the Board of Directors of Arnoldo Mondadori Editore S.p.A., chaired by Marina Berlusconi, reviewed and approved the Interim Management Statement at 30 September 2023 presented by Chief Executive Officer Antonio Porro.
“The Mondadori Group has recorded excellent results and a sharp increase in profitability in the first nine months of 2023, attributable to the pursuit of a meticulous management of operations, the contribution of recent acquisitions and the synergy arising from their integration, which allowed for an improvement in the performance of all business areas and a capital strengthening of the Group. We can therefore confirm what was announced on 29 June in terms of expected results for the ongoing year, namely an economic and financial improvement”, said Antonio Porro, CEO of the Mondadori Group.
Performance at 30 September 2023
Consolidated revenue for the first nine months of 2023 amounted to € 679.9 million versus € 678.2 million in the first nine months of 2022, growing by 0.3%. Like-for-like, organic revenue growth came to 1.1%.
Adjusted EBITDA for the first nine months of 2023 was € 129.3 million, an increase of around € 14 million on the € 115.5 million recorded for the same period in 2022.
Netting the results for the respective periods in question of the reliefs and contributions respectively paid, the growth recorded by Group’s EBITDA would exceed € 17 million.
All business areas contributed to the result, especially the Trade BOOKS Area, due in particular to the effect of the consolidation of the results of the recently acquired companies, the Education BOOKS Area and the RETAIL Area.
Group EBITDA for the first nine months of the current year amounted to € 131.5 million, compared to € 114.5 million at 30 September 2022, an improvement of approximately € 17 million attributable to the operating dynamics and the recognition in the current year, in the MEDIA Area, of the net capital gain resulting from the sale of the titles Grazia and Icon (and the related international network).
Thanks to the positive performance of all business areas, the Mondadori Group’s EBIT for the first nine months of 2023, positive for € 90.5 million, showed an improvement of € 12.5 million compared to 2022. The result was achieved despite the booking of approximately € 4 million in higher depreciation/amortisation resulting from the greater investments made in the last 12 months, the consolidation of new companies (€ +1.0 million) and the accounting effects of the PPA (Purchase Price Allocation) process (€ +1.2 million compared to the first nine months of 2022).
Neutralising extraordinary items and the impact of the PPA process related to the companies acquired in the last 24 months, Adjusted EBIT would amount to € 92.1 million, up by more than € 10 million (+12.9%) compared to the same period of the previous year.
Financial expense grew by over € 3 million, of which around € 2 million as a result of the higher cost of debt.
The consolidated result before tax was positive at € 87.1 million, an improvement of about € 11 million compared to € 75.8 million in the first nine months of 2022. The over € 2 million improvement in the profits of associates, in addition to the information already noted, contributed to this performance, particularly as a result of the update in the fair value measurement of the investment in the company A.L.I. and the recognition of a capital gain of € 0.4 million from the sale of the residual investment in SEE, the publishing company of Il Giornale.
The Group’s net profit at 30 September 2023, after minority interests, was positive for € 66.3 million and showed a significant improvement of € 8 million (around 14%) versus € 58.3 million recorded in first nine months of 2022.
Tax costs in the period totalled € 20.5 million versus € 17.6 million at 30 September 2022 due to the higher pre-tax result.
The Group’s capital structure grew stronger still: the Net Financial Position excluding IFRS 16 at 30 September 2023 amounted to € -152.3 million (net debt), an improvement of over € 20 million versus € -173.4 million at 30 September 2022, as a result of the relevant cash generation of the business and despite the cash-out relating to acquisitions made during the last 12 months and the distribution of dividends in May 2023 for around € 29 million.
The IFRS 16 Net Financial Position came to € -223.9 million, from € -235.7 million recorded at 30 September 2022, including an IFRS 16 component of € -71.6 million.
At 30 September 2023, cash flow from ordinary operations in the last 12 months came to € 64.6 million, while cash flow from extraordinary operations was negative for € 13.2 million.
Consequently, LTM Free Cash Flow at 30 September 2023 was positive for € 51.4 million, confirming the Group’s capacity to finance its growth policy by external lines.
Performance of Business Areas
Trade Books Area
Following the consolidation phase of 2022, 2023 showed further growth in the book market for 2.3% (in terms of value) and a substantial stability in terms of volume compared to 2022. The third quarter in particular showed a 1.6% increase in terms of value (source: GFK, September 2023).
In this context, the Mondadori Group’s publishers recorded growth of 2.2% in the first nine months, which is in line with the reference market, despite the third quarter of 2022 having benefited from a strong publishing plan. Thanks to this performance, Mondadori has consolidated its national leadership position, with a market share which, in September 2023, remained stable at 27.3%.
Revenue in the first nine months of 2023 in the Trade BOOKS Area stood at € 268 million, increasing by 14% compared to the same period in 2022.
Adjusted EBITDA in the first nine months of 2023 amounted to € 41 million: net of reliefs relating to Electa’s museum activities (€ 6.4 million), which had benefited in 2022, the area recorded growth of 23% (€ 7.6 million), largely attributable to the contribution of the newly acquired companies in the current year.
The profitability at 30 September 2023 achieved by the Trade BOOKS Area was approximately 15%, showing improvement on the same period in 2022, excluding the contribution of the reliefs (14%).
Education Books Area
The Mondadori Group’s publishing houses in the context of school textbooks achieved a market share (adoption) of 32%, substantially stable compared to the figure reported in the previous year, with growth in the secondary school segment (upper and lower secondary schools) and a decrease in primary, characterised by higher volatility and lower profitability.
In the first nine months of 2023, the school textbooks business reported overall revenue of € 215.5 million (€ 213.7 million in the corresponding period of 2022), increasing by 0.8% despite a partial delay in the distribution activities.
In particular, an analysis of the trend by school level shows how revenue from first- and second-level secondary school – accounting for 80% of the area’s revenue – has grown by around 3%, with a trend offset by the decrease recorded by primary school (-7.9% compared to the same period in 2022), in line with the adoption trend reported. As expected, the sales of third-party publishers distributed by Rizzoli Education fell by 7%.
Adjusted EBITDA of the Education BOOKS Area in the first nine months of the year stood at € 73.9 million, a clear improvement compared to € 68.1 million in the corresponding period of financial year 2022 (+8.5%), mainly due to a different and more favourable mix of revenue and a lower percentage of product cost and promotional costs.
Retail Area
As already mentioned, the book market in Italy in the first nine months reported a 2.3% growth compared to the same period in 2022; in this context, the physical channel grew by +4.8% while the online channel declined (estimated at -1.6%), even if gradually recovering in the third quarter of 2023 compared to the figure from the corresponding period of 2022.
In the first nine months of 2023, Mondadori Retail recorded a 5.7% increase in book sell-out in stores; thanks to this overperformance, driven by excellent performance reported by physical stores, Mondadori Retail’s market share stood at 13% of the total market, +0.4% on 30 September 2022, and almost came to 20% of the physical market.
In the first nine months of the year, the RETAIL Area reported revenue of € 133.4 million, up by € 7.4 million (+5.9%) versus the same period of the prior year. The ongoing development and renovation of existing stores and the focus on the core business of books have enabled the Mondadori Store network to consolidate its role in the market, as demonstrated by the solid growth in revenue from the book product.
An analysis of sales by channel shows a further increase in revenue from directly-managed bookstores (+12.8% compared to the same period in the previous year) and franchisee bookstores (+4.0% compared to 30 September 2022) and, at the same time, a decline in the Online and Bookclub channels.
As far as the product categories are concerned:
- the book area was the main component of revenue (more than 80% of the total), up comprehensively by +6.6% compared to 2022, driven by the excellent performance of physical stores;
- Extra-Book sales were on a positive trend (+14.7% versus the first nine months of 2022) confirming the excellent signs arising in the last year, due to the growth in the stationery, games, gifts and music.
The RETAIL Area had a positive Adjusted EBITDA of € 8.3 million, a value that has doubled compared to the figure for the first nine months of 2022 (€ +4.2 million).
Media Area
In the first nine months of 2023, the MEDIA Area recorded revenue of € 101.5 million, a reduction of approximately 25% on the same period of the previous year. On a like-for-like basis (thus excluding the effect of the deconsolidation of the titles sold at the beginning of 2023 and of Press-di’s distribution activities), this reduction is smaller by around 6% thanks to the performance of near stability achieved in the third quarter of the year and shows different trends in the two digital and print components.
The Digital Area, which accounts for over 37% of the area’s overall revenue, showed an increase in advertising revenue of around 20%, deriving in particular from the positive performance of MarTech; the Print Area fell by around 16%, mainly due to the significant drop in add-on sales in the period.
In the first nine months of 2023, the Mondadori Group retained its position as Italy’s top multimedia publisher: in print with 13 titles and 9 million readers; on the web with 12 brands and approximately 27.7 million average unique users per month; on social media with 100 profiles and a fanbase of around 100 million.
In the magazine segment, the Group’s market share (in terms of circulation) stood at 20.3%, up slightly – with a like-for-like portfolio of titles – versus the figure in the same period of 2022 (19.8%), due to improved performance on that of the reference market.
Adjusted EBITDA in the MEDIA Area amounted to € 10.3 million, up by around 10% compared to the first nine months of 2022, mainly attributable to the traditional activities – which benefited from a contribution to offset the costs incurred by the publisher for the distribution of periodicals (€ 2.8 million) – which more than offset the decrease in the margin on sales of collateral items; in the Digital Area, Adjusted EBITDA is essentially stable on the same period in 2022 thanks to higher advertising revenue, despite the higher costs incurred for launching new initiatives tied to the influencer marketing segment and the deconsolidation of the result related to the digital activities of the titles sold.
Performance in Third Quarter 2023
Consolidated revenue for the third quarter of 2023 amounted to € 317.6 million (versus € 323.1 million the prior year), showing a slight decline compared with the same period of 2022 (-1.7%). Like-for-like, organic revenue performance recorded -1.2%.
Adjusted EBITDA for the third quarter of 2023 was € 91.1 million, an increase of almost € 3 million on the € 87.9 million recorded for the third quarter of 2022.
In the third quarter of 2023, EBIT closed with a positive € 76.5 million, showing an improvement of € 1.8 million.
Neutralising extraordinary items and the impact of the PPA process, Adjusted EBIT would stand at € 77.8 million, up by around € 2 million from € 75.9 million in the third quarter of 2022.
Outlook for the year
The forecasts previously communicated to the market on 29 June 2023 are confirmed, and reported in full below.
Income Statement
- single-digit revenue growth;
- high single-digit/low double-digit growth in Adjusted EBITDA, with margins expected to range between 16% and 17%;
- approximately 20% growth in net profit.
Cash Flow and Net Financial Position
- ordinary cash flow is expected to range between € 65 and 70 million, showing an increase of up to 15% compared to the figure from 2022;
- the Group’s net financial debt (IFRS 16) is confirmed to come in, at end FY 2023, as 1.0x adjusted EBITDA, down from 1.3x at end 2022.
The presentation of the results at 30 September 2023, approved today by the Board of Directors, is available on 1Info (www.1info.it), on www.borsaitaliana.it and on www.gruppomondadori.it (Investors section). A Q&A session will be held in conference call mode at 4.00 pm for the financial community, attended by the CEO of the Mondadori Group, Antonio Porro, and the CFO, Alessandro Franzosi. Journalists will be able to follow the meeting in listening mode only, by connecting to the following phone number +39.02.8020927 or via web at: https://hditalia.choruscall.com/?calltype=2&info=company.
The Financial Reporting Manager – Alessandro Franzosi – hereby declares, pursuant to Article 154 bis, paragraph 2, of the Consolidated Finance Law, that the accounting information contained herein corresponds to the Company’s records, books and accounting entries.
Annexes in the complete pdf:
- Consolidated Statements of Financial Position
- Consolidated Income Statement
- Consolidated income statement – III quarter
- Group cash flow
- Glossary of terms and alternative performance measures used