The Vaud-based advertising broker Publigroupe is facing its worst crisis in 50 years and continues to make a loss. In the first half of 2009, it suffered a 28 percent drop in sales to CHF 798.4 million. At the bottom line, the company posted a loss of CHF 8.5 million after a profit of CHF 43.9 million in the same period last year. According to a press release issued on Monday, the economic trend is hitting the advertising markets ever harder and accelerating their structural changes.
The operating loss (EBIT) amounted to CHF 3.5 million after a plus of CHF 61.9 million in the previous year. At that time, Publigroupe had benefited from a pre-tax profit of CHF 42.5 million from a real estate sale, according to the statement.

Media Sales-Publicitas hardest hit
The main reason for the decline in sales is the advertising business in the print media. The Media Sales-Publicitas segment recorded a 28.8% drop in sales to CHF 658.3 million. Sales generated in press advertising (CHF 530 million) fell by 27%, with the slump affecting all regions and advertising categories. Commercial advertising fell by 20.3 percent. Job advertisements, which are dependent on the economy and the labor market, continue their downward slide. At the end of the first half of the year, the decline amounted to 41%.
Income from internet advertising is also declining - but less sharply than in the print sector. Display online advertising sold by Media Sales in Switzerland - including category ads on the Internet - fell by 8% to CHF 7.6 million. Television advertising fell by 4% to CHF 15.9 million, while radio advertising remained stable at CHF 3.1 million. Sales of advertising for cinemas are 32% below the previous year's figure (CHF 8.1 million).

Continued austerity measures
Publigroupe intends to get to grips with the problems in print with continued cost-cutting measures and a new business model. After expenses were already reduced by CHF 22 million in 2008 compared to 2007, the savings in the first half of 2009 amounted to a further CHF 23 million. The new business model is to be introduced at the end of the year. The idea is that customers will no longer be paid exclusively according to turnover. Depending on the service, performance or transaction-based tariffs will also be charged.
Publigroupe, which has lost its major customers Edipresse and AZ Medien in recent months, does not expect the economy to recover in the current year. For this reason, more than 40 million francs are to be saved in print for 2009 as a whole. In the "Search & Find" and "Digital & Marketing Services" segments, the decline is only due to the economic situation. Thanks to solid business models, the Group is well positioned to benefit from the growth in online services.
The figures were viewed negatively on the stock market. They fell short of analysts' expectations in terms of turnover and exceeded them in terms of profitability. With low trading volumes and a slightly positive overall market, the shares traded at
11.30 a.m. two percent down at 98 francs.

The Vaud-based advertising broker Publigroupe is facing its worst crisis in 50 years and continues to make a loss. In the first half of 2009, it suffered a 28 percent drop in sales to CHF 798.4 million. At the bottom line, the company posted a loss of CHF 8.5 million after a profit of CHF 43.9 million in the same period last year. According to a press release issued on Monday, the economic trend is hitting the advertising markets ever harder and accelerating their structural changes.
The operating loss (EBIT) amounted to CHF 3.5 million after a plus of CHF 61.9 million in the previous year. At that time, Publigroupe had benefited from a pre-tax profit of CHF 42.5 million from a real estate sale, according to the statement.

Media Sales-Publicitas hardest hit
The Group's press activities were most affected. Media Sales-Publicitas recorded a 28.8 percent drop in sales to CHF 658.3 million. Sales generated in press advertising (CHF 530 million) fell by 27%, with the slump affecting all regions and advertising categories. Commercial advertising fell by 20.3 percent. The most significant losses were recorded in the financial sector, large-scale distributors, industrial equipment, recruitment agencies and the luxury sector. Job advertisements, which are dependent on the economy and the labor market, continued their downward trend. At the end of the first half of the year, the decline amounted to 41 percent.
Display online advertising sold by Media Sales in Switzerland - including category ads on the Internet - fell by 8% to CHF 7.6 million. Television advertising fell by 4% to CHF 15.9 million, while radio advertising remained stable at CHF 3.1 million. Sales of advertising for cinemas are 32% below the previous year's figure (CHF 8.1 million).