Full-Year 2017 Results Sharp rise in Group recurring EBIT(1): up 6.7%(2) to 403 millionOperating margin up to 5.7% from 5.3% in 2016
Solid financial position
Proposed ordinary dividend unchanged at 1.30 per share
2018 Group recurring EBIT(1) target stable(3)
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In 2017, the Lagard re group delivered a further increase in operating profit, fuelled by stellar organic growth from Travel Retail and a strong performance from Lagard re Publishing.
Continued growth dynamic
The Lagard re group recorded revenue of 7,069 million in 2017, up 4.0% on a like-for-like basis, notably reflecting an outstanding contribution from Travel Retail and good momentum at Lagard re Publishing, which posted growth of 9.1% and 1.9% respectively.
Continued rise in Group recurring EBIT
Lagard re achieved its Group recurring EBIT target with growth of 6.7%(2) compared to 2016.
Group recurring EBIT came in at 403 million versus 395 million in 2016, powered by good performances from Travel Retail and Lagard re Sports and Entertainment as well as by a solid contribution from Lagard re Publishing.
Profit before finance costs and tax was 279 million versus 314 million in 2016, owing to a decrease in disposal gains which was partially offset by lower restructuring costs.
Accordingly, profit - Group share improved slightly to 179 million from 175 million in 2016.
Solid financial position
At end-2017, the Group s net debt remained stable at 1,368 million in the context of a sustained investment effort. The disposal of an asset offset an unfavourable year in terms of the change in working capital.
At end-2017, the leverage ratio (net debt(4)/recurring EBITDA(4)) was stable year on year at 2.2x.
I- REVENUE AND RECURRING EBIT(5) REVENUE
Revenue totalled 7,069 million, up 4.0% like-for-like (down 4.4% on a consolidated basis). The difference between like-for-like and consolidated figures is essentially related to a negative scope effect resulting from the divestment of Press Distribution activities by Lagard re Travel Retail, partially offset by acquisitions at Lagard re Publishing. The negative foreign exchange effect resulted primarily from the depreciation of the pound sterling and the US dollar.
GROUP RECURRING EBIT
Group recurring EBIT advanced 2.1% on a consolidated basis to 403 million.
The divestment of Press Distribution activities by Lagard re Travel Retail (Belgium, Hungary and Spain) represented a 13 million negative scope effect. Changes in exchange rates had a 4 million negative impact.
Stripping out these effects, Group recurring EBIT growth was 6.7%, in line with the target announced in March 2017 ( growth between 5% and 8% versus 2016, at constant exchange rates and excluding the impact from disposals of Distribution activities ).
> Lagard re Publishing Revenue
Revenue for 2017 came in at 2,289 million, up 1.9% like-for-like (up 1.1% on a consolidated basis).
Business growth in 2017 was mainly driven by the good performance from Partworks (up 8.8%), particularly in Argentina and Japan, and by gains in France (up 3.4%), which was boosted by the success of best-selling titles (including Ast rix et la Transitalique and Dan Brown's Origin), by a record year for Le Livre de Poche paperbacks and by the success of textbook publishers amid curricular reform.
Business in the United States also delivered solid 2.7% growth, lifted by a busy release schedule, especially at Perseus and Nashville.
These positive factors helped offset declines in the United Kingdom (down 3.9%) and the Spain/Latin America region (down 5.2%), which suffered an unfavourable comparison effect resulting primarily from the success of Harry Potter and the Cursed Child in the United Kingdom and Spain's curricular reform in 2016.
In 2017, the contribution of e-books to Lagard re Publishing s overall revenue was 7.9% (8.0% in 2016).
Recurring EBIT
At 9.2%, the operating margin was stable, with recurring EBIT at 210 million, representing an increase of 2 million on 2016. The increase was mainly attributable to a strong performance in the United States, underpinned by successful releases as well as continued profitability gains as a result of the ongoing cost-cutting plan. These positive factors were partially offset by a decline in Partworks due to a richer launch programme, especially in Japan, and the unfavourable comparison basis in the United Kingdom in connection with the releases of Harry Potter and the Cursed Child and Fantastic Beasts in 2016.
> Lagard re Travel Retail Revenue
2017 revenue totalled 3,412 million, up 9.1% like-for-like (down 7.7% on a consolidated basis).
Lagard re Travel Retail posted very solid organic revenue growth in 2017, propelled especially by strong performances in the EMEA and ASPAC regions.
In France, the business generated solid 8.0% growth, led by Foodservice activities on the back of network expansion and the development of the platform in Nice, as well as by very good momentum in the Duty Free segment, focused mainly around the regional platforms.
EMEA (excluding France) once again posted strong growth (up 13.6%), spurred by network development, especially in Switzerland, Eastern Europe and Italy, as well as by a rise in passenger traffic and the modernisation of concepts.
Despite an unfavourable calendar effect and the impact of the hurricane season in the second half of the year, North America delivered a resilient performance and remained on the growth track (up 2.7%), lifted by network expansion.
The Asia-Pacific region delivered bullish 9.8% revenue growth, propelled by the new Hong Kong concession, strong performances by fashion stores in China and the upturn in the Pacific region on the back of the modernisation of the Duty Free store in Auckland (New Zealand).
Distribution operations s
