Board of Directors approves the report for the first half of the year to 30 June 2009

  • Consolidated revenues: €730.7 million. -21.4% compared with the €930.1 million to 30 june 2008 (-14.9% on a like-for-like basis)
  • Gross operating profit: €40.2 million. -61.5% on the €104.5 million to 30 june 2008
  • Consolidated operating profit: €27.9 million. -66.7% compared with the €83.8 million to 30 june 2008
  • Consolidated net profit: €7.3 million. Compared with a first quarter 2009 that recorded -€1.8 million

The Board of Directors of Arnoldo Mondadori S.p.A. met today, to examine and approve the management report for the first half of the year to 30th June 2009, as presented by the Group’s deputy chairman and chief executive, Maurizio Costa.

The market scenario

Recent macroeconomic figures appear to reject the danger that the current recessionary phase will become even worse, but in terms of national markets there is still no sign of a turnaround in consumer spending or investments.

In the markets of reference, the trends that became evident in the first months of the year have continued.

In particular (volume figures to May):

– Magazine circulations continued to fall by about 9% in Italy; while, in France, the drop was 8%, with essential stability in subscriptions;

– There was no sign of a recovery in advertising investments and levels remained significantly lower than those of 2008, with falls of 29% in Italy (in terms of value) and 18% in France;

– Italy also saw the continuing decline in the market for add-on sales, with a drop of 19% in copies and 23% in value;

– Following essential stability in the first months of the year, the Italian book market saw a fall, starting in April, of 2.6% in the large-scale retail and non-chain bookstores.

Group performance in the period to 30 June 2009

During the second quarter actions aimed at containing costs allowed the Mondadori Group to mitigate the negative impact on profitability of a fall in revenues – especially those from advertising; if the printing business (sold at the end of 2008) is excluded, non-recurring items and investments in development, the Group’s businesses generated gross operating profits in the second quarter of €33.6 million (8.9% of revenues), €18 million less (-34.9%) than in the same period of 2008.

Consolidated revenues to 30 June 2009 came to €730.7 million, a fall of 21.4% on the €930.1 million of the same period of 2008 (-14.9% on a like-for-like basis, excluding the activities of Mondadori Printing).

Consolidated gross operating profit amounted to €40.2 million, a fall of 61.5% compared with the €104.5 million in the first six months of the previous year; as a proportion of revenues, the figure went from 11.2% in 2008 to 5.5% this time.

Excluding the activities of Mondadori Printing the variation in operating profit was down by €50.8 million (-55.7%), essentially due to lower business profits (-€40.1 million of which €5,8 for add-ons); increased investments in developing businesses (-€1.6 million); non-recurring items (extraordinary elements and restructuring costs): -€9.1 million.

Consolidated operating profit to 30 June 2009 came to 27.9 million, a fall of 66.7% compared with the €83.8 million in the first half of 2008, with amortizations and writedowns on tangible and intangible assets of €12.3 million (€20.7 million in 2008).

As a proportion of revenues, a fall from the 9% of 2008 to 3,8%.

Consolidated pre-tax profit came to €17.6 million, a fall of 72.6% on the €64.2 million of the same period of 2008, with a fall of €9.3 million in net financial charges, due to a lower level of debt and, above all, a significant reduction in the cost of borrowing.

Consolidated net profit for the period to 30 June 2009 amounted to €7.3 million, compared with the €36.7 million of the previous year (-80.1%), and a first quarter 2009 that recorded a loss of €1.8 million.

Gross cash flow came to €19.6 million compared with the €57.4 million of the first half of 2008.

The net financial position went from -€490.3 million at the end of 2008 to – €473.9 million on 30 June 2009.

As of 30 June 2009 the personnel employed, on indefinite and fixed-term contracts, by the companies controlled by the Group totalled 3,861.

Compared with the first half of the previous year, on a like-for-like basis, in other words excluding Mondadori Printing, there was a fall in the number of personnel of 194.

Personnel costs, which amounted to €143.1 million, were down by 24.1% from the €188.6 million to 30 June 2008; net of Mondadori Printing the fall would be of 6.8%.


  • Books

In the first half of 2009 the Book Division generated revenues of €182.6 million, a fall of 5.2% compared with the €192.7 million of the same period of the previous year.

During the period the market was characterised by a general trend that, from March, was down compared with the first six months of 2008, both in terms of new titles and reprints.

In this context the Mondadori Group confirmed its leadership in trade books, with a market share, in just the medium to large-scale bookstores, of 27.8% (source: Nielsen Bookscan – period P6), markedly ahead of its main competitors. There was also an increase in the market share of Sperling & Kupfer and Einaudi, while there was a slight fall for Edizioni Mondadori and Piemme.

As regards the performance of the individual publishing houses, Edizioni Mondadori generated first half 2009 revenues of €65.2 million, a fall of 4.5% compared with the previous year. Significant titles during the period included three new titles published between the end of May and the beginning of June, both for the importance of the authors and their commercial appeal: Marina, an unpublished novel by Carlos Ruiz Zafón; La bellezza e l’inferno by Roberto Saviano; and Il ricatto, the new legal thriller by John Grisham, which benefited from the author’s presence in Italy for the launch.

In the paperback sector, sales were up by 6% compared with the previous year, with particular growth in the bookstore chains, also thanks to the Oscar Mondadori promotional campaign in the months of March and April.

Net revenues for the first six months at Einaudi amounted to €24.5 million, a fall of 7.2% compared with the same period of last year: there was a 5.9% drop in revenues from the bookstore channel, while instalment revenues were down by 10.3% and the sale of rights down by 20.4%.

Revenues from Mondadori Electa totalled €18.5 million, an 8.4% fall on the same period of the previous year, mainly due to the marked fall in add-on sales (-31%), in the context of a rapidly declining market, and an inconstant performance in higher margin businesses.

Sperling & Kupfer ended the first half of 2009 with revenues of €15 million, an increase of 15.4% compared with the first half of 2008. This result reflects good sales both through bookshops and organised distribution.

Net sales to 30 June 2009 at Mondadori Education amounted to €14.2 million, a fall of 6% compared with the first six months of the previous year.

Edizioni Piemme generated revenues in the period of €22.3 million, a fall of 17,4% on the first half of 2008, mainly due to a substantial drop in the supply of titles by Khaled Hosseini and a significant overall rise in returns.

  • Magazines Italy

The publishing business, both in Italy and around the world, has been significantly affected by the crisis that began in the second half of 2008. In Italy, following an extremely difficult first quarter, the second quarter proved to be equally problematic and, above all, without, for the moment, providing any indication of a turnaround in the trend. The fall in consumer spending has impacted also on the purchase of newspapers and magazines and, in a more marked way, of add-on sales products that often involve a significant investment over time because of the nature and duration of the offers.

In the same way, the financial crisis, which has evolved in to a full-blown recession, has led companies to drastically reduce their investments in communications, which a consequent slump in advertising expenditure.

In Italy, Magazine revenues in the first half of the year amounted to €253.2 million, a fall of 20.9% compared with the €320 million of the same period of the previous year.

This downturn was determined by a series of specific phenomena:

– in a market in which circulation volumes were down by around 10%, Mondadori saw its circulation revenues fall by less than the reference market and with an overall market share of more than 35%;

– Mondadori ended the first half with a fall in add-on sales of 32.8% – despite revenue levels remaining significant and higher than other magazine publishers -, in a market that recorded a generalised fall in all segments, with the exception of music;

– a substantial resizing of advertising revenues (-30.6%) that affected all sectors: especially fashion, cosmetics and furnishings.

The action taken by Mondadori to react to this context has included efforts to sustain and develop the titles and an increased control of costs.

International activities

During the period the effects were felt of the international crisis both on the revenues of the individual editions and the relative royalties, which were, however, compensated by the increase in the number of active licences and licensing revenues (+23%).

Moreover, by the end of the year, the existing 12 editions of Grazia will be joined by three new editions in France, Indonesia and Thailand. To the success of the Grazia Network, should also be added the positive performance of the licences for Casaviva, Flair, Sale&Pepe and Interni.

The joint-ventures in Russia and China performed well: in particular the Chinese edition of Grazia, launched in February, which has outperformed expectations in terms of circulation, while advertising revenues have been affected by the international economic situation.

The Attica subsidiary in Greece recorded results in line with expectations, thanks to a detailed cost control policy.

· Magazines France

Magazines in France generated total first half 2009 revenues of €170.5 million, a fall of 12.3% compared with the €194.4 million of the same period of the previous year. On a like-for-like basis, in other words net of the titles sold in 2008, the downturn was of 8.6%.

On the circulation side, newsstand sales in France were characterised in the first half by a 7.8% fall in copies (source: NMPP/TP).

In this context, the circulation revenues of Mondadori France, which account for 70% of the total, saw a fall of 6% – which was lower than the fall in the market – (on a like-for-like basis the fall was 3.1%), helped also by a slight increase in subscriptions (+1% net of the titles sold), that represent a stable source of revenues also in this difficult economic phase.

In terms of advertising sales, the market remained depressed during the whole of the period (-17.8% in terms of volume in the first 5 months; source: TNS-MI).

The advertising revenues generated by Mondadori France totalled €40 million, a fall of 25.3% compared with the first half of 2008 (-19.2% on a like-for-like basis).

During the period Mondadori France began negociations with Axel Springer for the sale of Auto-Journal and Sport Auto to EMAS, the 50-50 joint-venture with the German publisher created in 1988 which already publishes Auto Plus, the leading weekly in the auto segment. The grouping of all of the auto titles in a single company, that has in the past recorded excellent performances, will allow EMAS to become France’s leading publisher of car magazines. A sector that has been particularly hard hit by the current market downturn.

Moreover, the launch on the French market of Grazia, a strategic female magazine for Mondadori, is now imminent and will allow the Group to strengthen its position in the up-market segment with a brand that in just a few years has become firmly established internationally as the most authoritative interpreter of Italian style and fashion.

· Advertising

Total advertising revenues generated by Mondadori Pubblicità in the first six months of the year were essentially in line with the negative trend in the market and amounted to €126.4 million, a fall of 29.1% compared with the €178.2 million of the same period of last year, and following a first quarter 2009 that ended with a fall of 34.5%.

Magazine advertising, that constitutes the largest part of the portfolio, was, in fact, marked by a second quarter in gradual recovery, thanks to detailed and specific commercial policies.

Also other media recorded lower falls than the reference markets. For the Internet, web site further consolidated its growth, while in Radio, the acquisition, in March, of the contract for sales for Radio Kiss Kiss has made it possible to expand the offer in this sector, combining the new broadcaster with the Group’s radio station, R101, which has become a leading player in Italian commercial radio.

  • Direct Marketing

The Direct Marketing, in the period to May 2009, saw a fall of 17.7% (Nielsen figures in terms of value) largely as a result of a general slump in investments in communication.

In the first six months of the year Cemit generated revenues of €10.5 million, a 12.5% fall on the €12 million of the same period of the previous year: this performance, which was better than the reference market, is even more worthy of note if note is taken of the fact that it was produced despite the lack of income deriving from the elections of 2008.

  • Retail

Turnover by the Retail area in the first half amounted to €83.1 million, a fall of 3.6% compared with the €86.2 million of the same period of 2008.

The general downturn in consumer spending that characterised the first quarter of the year continued also in the second, with some slight signals of a recovery in the month of June. In this scenario, efforts were continued to reduce management costs and working capital and tighten the control of stocks.

Mondadori Retail, in its 29 directly-controlled stores, recorded revenues of €52.1 million, a 10.1% fall on the €58 million in the first half of 2008; a breakdown of revenues shows a 5% fall in the sale of editorial products; a 17% drop in the sale of IT products; a 11% fall in audiovideo; while there was a 20% increase in stationery.

Mondadori Franchising recorded revenues of €31 million, an increase of 9.6% on the €28.3 million of the first six months of last year.

The company continued with its development programme, confirming the position of the chain as Italy’s most extensive with 410 outlets (including the Edicolè format).

  • Radio

In the first half of the year, the radio advertising market saw a continuation of its negative trend (-18.6% to May. Source: FCP Assoradio).

In this context R101 recorded net revenues of €7 million, a fall of 14.6% compared with the €8.2 million of the first half of last year.

According to the new metric introduced by Audiradio, in the first six months of 2009 R101 reached around 9 million listeners per month, reducing considerably the gap with the top five commercial radio stations.

It should also be noted that, from June, the new web site is online, which has been developed on a new technological platform aimed at strengthening the online editorial offer, achieving greater access to users/listeners and encouraging a higher level of interaction with web radio users.


In July, the Group’s Human Resources Department presented to national and company trade union representatives a proposal for the reorganisation of the Magazine and Central Staff areas, with the aim of achieving significant cost reductions through the structural downsizing of journalistic and design staff.

The negotiation, which is continuing, foresees the evaluation of a range of instruments, including the use of early retirement.

Joint-venture between Mondadori Pubblicità S.p.A. and Publitalia ’80 S.p.A. for the sale of online advertising

As previously announced to the market, in July Mondadori Pubblicità and Publitalia ‘80, the advertising sales companies of the Mondadori Group and the Mediaset Group, have reached an agreement for the creation of a joint initiative for online advertising sales, through the establishment of a 50-50 new company. The new company will have the concession, or sub-concessions, to sell the advertising (with the exception of video) for the sites produced by the Mondadori Group, by RTI and by third-party publishers that are currently in the portfolios of either Mondadori Pubblicità or Digitalia 08. The joint venture will also target the online advertising investments of third-party publishers with a view to aggregating and maximising the value of the advertising opportunities on offer and to reach, in the short term, a leading position in the Italian online advertising.


In considering the evolution of the business, we think it is useful to distinguish between the short-term prospects and longer-term view.

In the short term:

– the planning of advertising investments by leading companies will largely remain inhibited by the situation of uncertainty and, despite no clear indications about the second half of the year, initial signals do not suggest a significant change in current trends;

– a recovery in magazine sales cannot be expected, neither is there likely to be a slowdown in the decline in add-on sales, that in all probability will stabilise broadly around current levels;

– the book sector will continue to be less affected than others and the publication of new bestsellers in the closing months of the year are expected to lead to satisfactory end of year results.

The company’s response to the certain reduction in revenues involves a range of actions, and over the coming months these will include:

– the continuation of efforts to simplify processes and structure, also through the introduction of an incisive restructuring plan;

– investments in the support and valorisation of company assets and the defence of positions of market leadership;

– increased investments in developing businesses and markets (digital, international network);

– the launch of the weekly women’s title Grazia in France, a fundamental step in the reinforcement of Mondadori France in the up-market segment.

2009 continues to prove to be a difficult and demanding year, both from a financial and a business perspective, with profitability levels being sacrificed, also in a bid to defend and develop the elements that underpin the entire business, a factor that is important for the success of a medium term vision. The future competitive scenario in the publishing sector has fundamentally changed and will reward those companies that are best equipped, in terms of both structures and products, to seize new market opportunities resulting from technological changes and new emerging business models.


The executive responsible for the preparation of the company’s accounts, Carlo Maria Vismara, declares that, as per art. 2, 154 bis of the Single Finance Text, the accounting information contained in this release corresponds to that contained in the company’s formal accounts.


The interim report for the period to 30 June 2009 will be made available at the company’s corporate offices, at Borsa Italiana S.p.A. and on the web site (News&Media and Investor Relations section) by 30 July 2009.


The report of the external auditors will be published, in the same way, as soon as possible and within the terms of current legislation.

[1] It should be noted that from 1 January 2009, replacing IAS 14, the IFRS 8 accounting principle, that regulates the information that must be disclosed for each relevant business in which the group operates, came into effect.

The application of this new principle has involved the publication of figures relating to the activities managed by the Mondadori France subsidiary separately from the entire Magazine Division, of which it is in any case a part. Consequently, in order to make a correct comparison, it has been necessary to also include the figures for the first half of 2008.

Moreover, following the sale of 80% of Mondadori Printing in November 2008, the section that included the figures relating to the group’s printing activities is no longer significant as per the terms of IFRS 8 and, consequently, such figures have been incorporated under the item “Corporate and other business”. The same attribution has been made for the figures for 2008.