Buoyant sales in the first quarter of 2015: 1,572 million, up 6% on a like-for like basis(1)Lagard re confirms its target for recurring EBIT of fully consolidated companies(2) for 2015
Sales in the first quarter of 2015, stood at 1,572 million, compared to 1,526 million in Q1 2014, up 3% on a reported basis and up 6% like-for-like.
The difference between data on a reported basis and like-for-like is explained in part by a positive currency effect of 64 million, due primarily to appreciation by the US dollar, the pound sterling, and the Swiss franc, and in part by a negative scope effect (- 99 million), which breaks down as follows:
Miscellaneous effects of sales deconsolidation, amounting to 162 million with, essentially:
- at Lagard re Services: deconsolidation of Relay activities in train stations in France (creation of a joint venture with SNCF) as well as high-street Retail activities in Poland (now consolidated using the equity method after the disposal of 51% of Inmedio s capital); disposal in Switzerland of Press Distribution activities (Naville) and book stores (Payot);
- at Lagard re Active: disposal of 10 magazines.
And 63 million in acquisitions, notably for Lagard re Services (integration of Airest activities, primarily in Venice), Lagard re Active and Lagard re Publishing.
By division:
Lagard re Publishing : sales of 421 million ( 7.1% on a reported basis and -2.2% like-for-like), with contrasting performances: a very strong start of the year in France, particularly in General Literature, but business contracted in other geographic areas (notably English-speaking countries) in light of a slower publishing schedule.
Lagard re Services : sales of 794 million (-7.4% on a reported basis, and 3.2% like-for-like). Travel Retail continued its solid growth ( 6.7% on a like-for-like basis), while the trend in Distribution was still negative (-2.7%).
Lagard re Active : activity up at 204 million ( 1.1% on a reported basis and 2.8% like-for-like) thanks to the good performance of TV Production.
Lagard re Unlimited : Lagard re Unlimited: as anticipated, an excellent first quarter, driven by a favourable event schedule; sales are up very significantly to 153 million ( 108.3% on a reported basis, 85.1% on a like-for-like basis).
I. GROUP CONSOLIDATED SALES AND ACTIVITY Sales (in million) 2015/2014 Change
Q1 2014 Q1 2015
on a reported
basis like-for-like
LAGARD RE
1,526 1,572
3.0%
6.0%
Lagard re Publishing
393 421
7.1%
-2.2%
Lagard re Services
858 794
-7.4%
3.2%
Lagard re Active
202 204
1.1%
2.8%
Lagard re Unlimited
73 153
108.3%
85.1%
Lagard re Publishing A strong start of the year in France
Sales for the division totalled 421 million ( 7.1% on a reported basis and -2.2% like-for-like). The difference between reported and like-for-like sales was mainly due to a positive currency effect ( 29 million) primarily associated with the US dollar and pound sterling. The scope effect was also positive ( 8 million) including acquisitions made in the United Kingdom (Constable & Robinson in February 2014, Quercus in May 2014) and the disposal by Spanish group Anaya of its publishing subsidiary in Argentina, Aique, in September 2014.
Figures below are presented on a like-for-like basis.
In France, activity has grown significantly ( 10.4%), with good performances in General Literature, with best-sellers in every house (L'homme qui ment, by Marc Lavoine, at Fayard; Hippocrate aux enfers, by Michel Cymes, at Stock; Vernon Subutex, by Virginie Despentes, at Grasset; The Black Box, by Michael Connelly, at Calmann-L vy) and in the Paperback segment (major success of the Fifty Shades series after the film s release). Distribution and Illustrated Books also had a good start to the year.
In the United States, activity is in contraction (-12.3%) due to a less-intensive new release schedule than Q1 2014, and a downturn in sales of e-books, which can be traced to two factors: Q1 2014 was still benefitting from a very high activity level with Amazon, before the trade problems with the latter arose. In addition, the agreement signed with Amazon in November 2014 was implemented beginning in March. This agreement, which maintains the agency contract model (prices set by the publisher), is resulting in the gradual disappearance of e-book discounts, which caused a slight loss in volumes at the end of the quarter.
The change in sales in the United Kingdom (-4%) was due to:
- a less-intensive new release schedule than in Q1 2014;
- a dip in sales of e-books, related to the lower number of best-sellers, and an unfavourable VAT effect (in line with a new European regulation, the VAT rate applicable to sales of e-books is now the consumer-country rate and no longer the rate in the country where the distributor is located).
The change in sales in the Spain/Latin America zone (-5.6%) was caused notably by the non-renewal of one-off operations in Q1 2014.
The decline in sales of Partworks (-8.5%) was the result of a difficult environment in Russia and by a negative comparison effect on Q1 2014, which had been very strong ( 11% compared to Q1 2013), thanks to a number of releases at the end of 2013.
Digital: the transition to digital remains isolated to the English-speaking countries and the General Literature segment, which only accounts for about 40% in sales for the division.
- In the United States, where the digital market is in contraction, e-book sales made up 28% of total sales for the division in Q1 2015, compared with 34% in Q1 2014.
- In the United Kingdom, where the market seems to be stabilising, sales for digital stood at 26% of total sales compared with 28% in Q1 2014. E-books accounted for 36% of total Adult Trade(3) sales in Q1 2015, compared to 40% in Q1 2014.
In Q1 2015, Digital accounted for 12.2% of total
