Publigroupe: Profit warning first half year

Specifically, the results at Media Sales fell significantly short of expectations. In addition, the profit warning was due to the changed seasonality of the print publishing program at Search & Find, which resulted in a shift of a large part of the profit to the second half of the year. The company wrote this in a statement on Friday.

At Media Sales, the continuing decline in sales in the press advertising business continued to outweigh the gains achieved through cost-cutting and other restructuring measures, as well as growth in the digital business. As part of the transformation of Publicitas under its new CEO Alain D. Bandle, the sale of a majority stake in Xentive, Publicitas' business process outsourcing (BPO) provider, to Mediaspectrum (Werbewoche.ch reported). Publigroupe's half-year results will be announced on 26 August 2013.

For 2013, Publigroupe had assumed that a substantial improvement in results at Publicitas and a significantly lower cost burden would enable Media Sales to compensate for the negative market environment in the print business and achieve a break-even result for the year as a whole. However, the current figures for the first six months of 2013, including the latest results factored in for the month of June, indicate that the break-even point will not be reached - neither for the first half of the year, in which a negative operating result of CHF 7-8 million is expected, nor for 2013 as a whole.

This negative result was due to another significant decline in the print business. This slump neutralized the operational improvements already achieved and the new measures introduced. In addition, the investments in new growth areas have not yet had the desired effect.

To further reduce IT costs and make them more flexible, Publicitas has opted for Mediaspectrum's software solution, which will be used to run its future process solutions for the advertising business from January 2014. Mediaspectrum's platform will also be made available to the entire industry via Xentive, 51 percent of which will be sold to Mediaspectrum. The new platform is expected to enable Publicitas to significantly reduce its IT costs over the next three years. The sale is subject to approval by the Swiss Competition Commission Weko.

Alain D. Bandle, CEO of Publicitas since March 1, 2013, will provide an update on the restructuring measures based on the previously communicated strategic cornerstones of the Media Sales segment at the presentation of Publigroupe's half-year results on August 26, 2013.

Small operating profit expected for full year

Search & Find and Digital & Marketing Services (DMS) together are expected to achieve an operating result at around the same level as last year. Online sales at Search & Find and Local.ch continue to grow in the double-digit range, Publigroupe writes in the release. Due to the transfer of the Yellow and White Pages business to the new Local Guide product and the associated changes in the seasonal revenue pattern, Search & Find's profits will largely shift to the second half of 2013, with the full-year 2013 result expected to be in line with or slightly ahead of last year's result. As expected, DMS will report slightly lower earnings due to investments in startups Improve Digital (acquired in December 2012) and Spree7. Zanox's results for the first half of 2013 are in line with the previous year for the first six months.

For 2013 as a whole, Publigroupe expects a positive operating result at the previous year's level, i.e. low single-digit growth, according to the statement.
Publigroupe's half-year results will be announced on 26 August 2013. On this occasion, Publigroupe will provide information on further measures with which the company is responding to the current market environment.