Lower sales and significantly lower profit
On Thursday, Tamedia presented its financial results for the past fiscal year. Revenue fell by 59 million Swiss francs to just over one billion Swiss francs. The media group’s profit plummeted by 63.4 percent to 122.3 million Swiss francs. For the first time, the company’s editorial and commercial digital offerings accounted for more than half of its earnings.
The Swiss media group Tamedia generated operating income of CHF 1,004.8 million (-5.5 per cent) in 2016. Earnings before interest, taxes, depreciation and amortization (EBITDA) fell to CHF 201.0 million (-17.5 per cent, EBITDA margin 20.0 per cent) due to the declining market environment. Earnings before interest and taxes (EBIT) fell to CHF 113.5 million (-13.1%, EBIT margin 11.3%). The result amounted to 122.3 million francs.
The 5.5% decline is due to the structural change in the print advertising market, the discontinuation of the Ziegler Druck print shop at the end of 2015 and the sale of Swiss Online Shopping AG (FashionFriends). Operating income before depreciation and amortization (EBITDA) fell by CHF 42.5 million or 17.5% to CHF 201.0 million. The EBITDA margin fell from 22.9 percent in the previous year to 20.0 percent. The operating result (EBIT) fell by 13.1% or CHF 17.2 million to CHF 113.5 million. The EBIT margin fell from 12.3% in the previous year to 11.3%. At CHF 122.3 million, the 2016 result was down 63.4% or CHF 211.7 million on the previous year's figure of CHF 334.0 million, which was influenced by the revaluation gain from the merger of search.ch and local.ch. The eligible employees of Tamedia participate in the result with a profit share of CHF 5.8 million.
Challenging market environment
Pietro Supino, publisher and Chairman of the Board of Directors of Tamedia: "Despite remarkable innovations, advertising revenues fell sharply last year. I am encouraged by the fact that revenues from the user market are stable and that the commuter media have largely succeeded in compensating for lost print revenues with growing digital revenues. Thanks to our strategy of digital transformation and diversification, Tamedia is in a good position despite the unpleasant development of the advertising market."
In a challenging market environment for the print advertising market, Tamedia's transformation into a digital media group has accelerated further. Last year, the journalistic and commercial digital offerings contributed more than half of Tamedia's operating result for the first time. "We have been working towards this corporate goal in recent years and we are proud to have achieved this important interim goal. This development is particularly impressive in view of the fact that our digital offerings still posted a consolidated loss in 2012", says Tamedia CEO Christoph Tonini.
Regional publishing challenged by sharply declining advertising market
The advertising market for regional daily newspapers declined at an above-average rate in the reporting year, challenging the media in the Regional Publishing division. In particular, advertisements in the daily and regional weekly press, which are important for Tamedia, fell significantly. Revenues (operating income) from third parties in the Regional Publishing business division fell by 9.3 per cent to CHF 425.2 million in 2016 (previous year: CHF 468.8 million).
The decline in sales was caused partly by the closure of the commercial print shop in Winterthur, but mainly by the sharp downturn in the advertising market. As a result, the operating result before depreciation and amortization (EBITDA) fell by 16.9% to CHF 67.9 million (previous year CHF 81.8 million), which also had an impact on the EBITDA margin, which now stands at 14.4% (previous year 15.7%).
Journalism National with mixed results
The advertising market also declined sharply last year for the Sunday and general press, which was reflected particularly clearly in the sales and earnings performance of the media in the National Publishing division. Exceptions to this trend were the media of the 20 Minuten Group, the magazine Schweizer Familie and the SonntagsZeitung, which bucked the general trend and closed the reporting year with an improved result compared to the previous year. Sales (operating income) in the National Publishing business division to third parties fell by 5.4% to CHF 354.0 million in 2016 (previous year: CHF 374.0 million). As a result, operating income before depreciation and amortization (EBITDA) fell by 10.2% to CHF 65.1 million (previous year: CHF 72.5 million). The EBITDA margin fell to 18.4% (previous year 19.3%).
Digital is the most profitable business segment
The Digital business division developed into Tamedia's most profitable business division in 2016. Following the strong growth of recent years, Tamedia focused on the further development of Classifieds, Marketplaces, Services and Ventures, which are combined in the Digital business division, in the reporting year. The platforms developed positively and were able to increase their revenues organically by 4.4 per cent and their EBITDA organically by 13.2 per cent. The Digital business division's revenue (operating income) from third parties rose by 2.1% to CHF 225.6 million in 2016 (previous year: CHF 221.0 million), partly due to revenue adjustments at Trendsales and the sale of Swiss Online Shopping AG. The growth of the JobCloud AG and homegate.ch platforms in particular contributed to the increase in revenue. Operating income before depreciation and amortization (EBITDA) rose by 21.2 percent to CHF 85.3 million (previous year: CHF 70.4 million). The EBITDA margin rose to an outstanding 37.4 percent (previous year 31.9 percent).
