The economic crisis has put a damper on the results of the Vaud advertising agency Publigroupe. The company suffered a loss of CHF 42.1 million in 2008. In the previous year, Publigroupe had still made a profit of CHF 73.1 million, thanks in part to the sale of an investment.
The current loss is due to goodwill amortization of CHF 33.8 million, including at the subsidiaries Cinecom and Radiotele, as the company announced on Friday. The core Media Sales division, which bundles press, television, radio, cinema and online advertising, accounted for around CHF 28.9 million of the loss.
In addition, there were corrections to the shareholdings - for example in the publishing houses Edipresse (19.9 percent) and Tamedia (1.4 percent) - which had a negative impact of 44.7 million on the result. Publigroupe's Board of Directors now intends to reduce the dividend to CHF 3.50 per share, compared to CHF 13 in the previous year.
Operating profit despite drop in sales
Sales fell by 1.9% to CHF 2.121 billion. The Media Sales division recorded a drop in turnover of 11.7% to CHF 1.736 billion. In the Swiss market, the decline in this division amounted to 12%, while sales abroad were down 11.7%.
Thanks to the positive figures from Publigroupe's other divisions (Search & Find, Digital & Marketing Services, Custom Publishing) and the profit from the sale of real estate investments, operating profit (EBIT) amounted to CHF 40 million. However, the decline of 47.7 percent compared to the previous year is still considerable.
Online market continues to grow
While press advertising also declined at the beginning of 2009, online activities continue to grow strongly. Publigroupe already generates 14% of its gross margin in the online and digital sector. Sales have risen by 23 percent to 123 million. These figures do not include the stake in Zanox (47.5 percent), whose sales amounted to CHF 322 million.
Changes in the Media Sales segment
Due to the poor results in all areas of Media Sales, with the exception of the Internet (up 15 percent) and television (up 7 percent), the company now intends to change its cost structure. According to the press release, this will result in additional savings of CHF 20 million in 2009. There are changes at the subsidiary Publicitas, including to the business model: specifically, a different remuneration concept and a digital and open platform for the management and transmission of advertising orders.