Third-quarter 2015 financial information Buoyant growth of sales, at 1,846 million, up 2.6% like-for-like(1)2015 Group recurring EBIT(2) target confirmed
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The third quarter of 2015 saw another buoyant performance from Travel Retail and the return to growth (on a like-for-like basis) of Lagard re Publishing.
The Lagard re group sales totalled 1,846 million in Q3 2015, up 2.6% on a like-for-like basis. On a reported basis, however, sales were down 3.0%, mainly owing to negative scope effect (- 144 million), notably due to the disposal of Press Distribution and the deconsolidation of a proportion of sales. Foreign exchange effect was positive ( 43 million).
By division (like-for-like basis):
- Lagard re Publishing: sales went up ( 2.0%), driven by the Education segment in Spain, and to a lesser extent, by General Literature in France and Partworks.
- Lagard re Travel Retail: the pace of growth increased for this division ( 6.7%), driven by strong airport sales, particularly in Europe.
- Lagard re Active: sales decreased (-10.2%), mainly because of an unfavourable comparison basis for Lagard re Studios(3).
- Lagard re Sports and Entertainment(4): sales down 4.1%, mainly owing to seasonal factors.
At 30 September 2015:
For the first nine months of 2015, sales totalled 5,150 million, down 2.2% on a reported basis, but up 2.8% on a like-for-like basis. The difference between the two figures is explained by negative scope effect (- 421 million), which were only partly offset by positive foreign exchange effect ( 173 million). The scope effect was mainly related to the disposal of Distribution assets by Lagard re Travel Retail, and to the deconsolidation of Relay activities in train stations in France from the beginning of September 2014, following the creation of a joint venture with SNCF.
Over the first nine months of the year, growth in sales was chiefly driven by good performances from Travel Retail and Lagard re Sports and Entertainment.
I- GROUP CONSOLIDATED SALES AND ACTIVITY
> Lagard re Publishing
Sales for the first nine months of 2015 totalled 1,575 million, up 7.4% on a reported basis and down 1.0% on a like-for-like basis, with the difference due to favourable scope effect ( 21 million), relating to acquisitions in the United Kingdom, and a positive foreign exchange effect ( 102 million), attributable to the US dollar and pound sterling.
There were good sales performances in France ( 2.1%) in General Literature and in Spain ( 5.4%) in Education. However, these positive effects did not entirely offset the decline in the United States (-6.6%), which benefitted from an expanded publishing schedule in 2014.
Third-quarter 2015:
At 607 million, growth resumed on a like-for-like basis as sales were up 2.0% ( 7.8% on a reported basis). The difference was chiefly due to a positive foreign exchange effect ( 32 million).
Figures below are presented on a like-for-like basis.
In France ( 0.8%), sales were mainly driven by good performances in General Literature, with a number of bestsellers, notably Grey, the fourth volume in the Fifty Shades of Grey saga, La septi me fonction du langage, by Laurent Binet, Eva, by Simon Liberati, D apr s une histoire vraie, by Delphine de Vigan. The awarding of the Renaudot Prize for Delphine de Vigan and the Femina Prize for Christophe Boltanski (La Cache) should have a positive impact on sales in the fourth quarter. Education (in a year preceding curricular reform) posted mixed performance in the third quarter.
In the United States, the decline in sales (-4.2%) was mainly due to an unfavourable comparison with the third quarter 2014 publications calendar, and to the decrease in sales of e-books. The fourth quarter should conversely return to a significant growth.
In the United Kingdom, the growth in sales ( 1.2%) was driven by Education and Illustrated Books (colouring books for adults).
The Spain/Latin America region posted an excellent performance ( 13.3%), mainly in Education (catch-up in sales from the second quarter of 2015 and curricular reform effect).
Partworks have shown a very positive dynamic ( 8.6%).
E-books: the weighting of e-books in Lagard re Publishing total sales fell in the third quarter of 2015, to 7.9%, from 8.9% in the same period of 2014.
In the first nine months of the year, e-books represented 9.6% of total sales, compared with 10.4% in the same period of 2014. This digital transition remains limited to English-speaking countries and to the General Literature segment, where similar market trends were seen:
- in the United States, where the e-book market is declining (confirming the slowdown seen since 2014), e-books accounted for 24% of Trade(5) sales, versus 28% at the end of September 2014;
- in the United Kingdom, where the e-book market has been broadly flat since the start of the year, e-books represented 30% of Adult Trade(6) sales versus 34% at end-September 2014, reflecting primarily the rise in VAT.
> Lagard re Travel Retail
With 2,572 million sales at 30 September 2015, revenues posted buoyed growth up 4.7% on a like-for-like basis (down 10.9% on a reported basis), with a favourable foreign exchange effect of 50 million (notably rise of the US dollar and Swiss franc). As expected, scope effect was negative at - 475 million, comprising:
The effects of the deconsolidation of a proportion of sales ( 534 million), essentially relating to:
- the deconsolidation of sales from Relay in train stations in France (following the creation of a joint venture with SNCF in September 2014, now consolidated using the equity method), for 218 million, and of
high-street retail sales in Poland (consolidated using the equity method following the sale of 51% of Inmedio in December 2014), for 84 million;
- the disposal of Press Distribution
