06.04.11

Higher profit and major gains in market share for Ringier in 2010

The international Swiss media company Ringier recorded robust business results in 2010 and net profit of CHF 61.8 million, a figure more than triple that of the previous year.In spite of special effects such as the strong Swiss franc and the special consolidation situation due to the joint venture with Axel Springer, consolidated sales stabilised at CHF 1264 million, a figure almost on par with the previous year. Ringier Switzerland recorded the biggest growth with more than CHF 60 million but most other regions also achieved positive trends in local currency.Digital proceeds rose to 10.3 per cent of the total.Consistent cost discipline and market share gains in the key markets of Switzerland and Central and Eastern Europe also boosted consolidated business results.For 2011, Ringier expects further sales growth and is focusing on investments in three strategically important areas: publishing business, digital business, and entertainment.

The Ringier Group increased net profit in business year 2010 (January through December) to CHF 61.8 million as compared with 2009, for a return on sales of 4.9 per cent.Sales amounted to CHF 1,264 million (-2.5 per cent).The slight reduction over the previous year came mostly from negative currency trends and consolidation effects triggered by the joint venture with Axel Springer.Country results from Serbia, Slovakia and the Czech Republic are included in Ringier’s consolidated accounts at a rate of only 50 per cent from mid-2010 onward yet also from mid-year onward, 50 per cent of the Springer business from Poland and the Czech Republic is included in our consolidated accounts.In Switzerland the results from Good News were also included proportionally in 2010 keeping with the entertainment strategy. We will do the same with Tickecorner from 2011 onward.Sales would have been higher if the situation had been unchanged from 2009, i.e. without the consolidation effect of the joint venture and assuming stable exchange rates.Cash flow rose by CHF 67.3 million compared with 2009 to CHF 161.1 million. Return on cash flow amounted to 12.7 per cent.

Ringier CEO Christian Unger gave his take on the results: «We can be extremely pleased with the good business results in 2010.We increased profits substantially in a tough market environment. The Group Executive Board enacted a new strategy in 2009 calling for a focus on core business, digital business and entertainment. Events show that this strategy is successful and now bearing its first fruits.In many countries, we improved our profitability and enlarged our market share. The founding of the Eastern European joint venture with Axel Springer is an essential change in strategic direction for our further growth in these crucial markets.We strengthened our position in the entertainment segment by taking over Ticketcorner and stimulated our core business by making investments in new newsrooms. In addition, we took timely steps to expand other lines of digital business so we are benefiting from the fast expansion of electronic markets.The digital campaign we began in 2010 has had encouraging results including the launch of various apps and online platforms. We will continue investing in this segment.»

Unger went on to say about business year 2011: «For 2011, we expect growth primarily in the Internet segment, where we still rely on organic growth but also acquisitions.Our core business is healthy and highly profitable and will remain a mainstay of sales even following further market adjustments.Ringier is an international media company with superb partners and a strong position in its home market. It successfully occupies market niches the world over and is well-positioned to take an active part in shaping the modern media landscape.»

Further investment driven growth in digital business
Income in the individual segments saw greater growth in digital business, which accounted for CHF 130.1 million or 10.3 per cent of total sales.The MediaSwiss Group was the main driver of growth with its successful Scout24 network and Gate24 platforms.From a regional perspective, Switzerland and Germany sharply increased their share of sales by 11.8 per cent to CHF 613.7 million whilst Asia Pacific recorded a slight decline in sales to CHF 50.3 million (-3.2 per cent).Print Switzerland also dipped into the red, as sales dropped by -4.6 per cent. Yet it laid the groundwork for continued business success, too, with its withdrawal from gravure printing and the investments of Swissprinters.

The Ringier Group decreased total expenses by -8 per cent to CHF 1,103 million by successfully carrying out various cost-cutting programmes.This improved cost discipline allowed the Group to increase capital expenditures by a significant 54 per cent to
CHF 149.5 million.The expenditures focused on subsidiaries in the entertainment and digital business segments, in the new newsrooms in Switzerland and Serbia and in the modernisation of the printing plants.

Balanced structure for sales revenues means minimal dependencyon the advertising market
The structure for sales revenues is balanced among the various segments.Distribution revenues account for CHF 347 million, or 27.5 per cent, of total sales revenues and thus achieve a balance with ad revenues (CHF 325.7 million/25.8 per cent), printing revenues (CHF 286.9 million/22.7 per cent) and digital media revenues (CHF 130.1 million/10.3 per cent).From a regional perspective, Switzerland and Germany still contribute the largest portion to total consolidated sales, at 69.4 per cent (CHF 613.7 million).Central and Eastern Europe is another essential region for sales, accounting for 17.1 per cent of the total. If Hungaryand Romania are included, this figure rises to 26.6 per cent (CHF 336.4 million).Asia Pacific amounts to 4 per cent (CHF 50.3 million) of the total.Thanks to the relative strength of distribution revenues, Ringier is less dependent on the procyclical advertising market and able to respond flexibly to changing market conditions.

Country information: upswing in most regions
In Switzerland, Ringier is benefiting from the recovery of the advertising market but also from the investments made in the Blick newsroom and extension of publishing content to electronic platforms.Ad revenues rose by CHF 13 million and digital revenues by CHF 16.4 million.The Blick Group achieved an impressive turnaround and reported a most encouraging trend in readership figures.For example, Blick am Abend expanded its reader base by 22 per cent to top the mark of 600,000 readers for the first time.Magazines also saw circulation growth in Switzerland, with Romandy, the French-speaking part of the country, contributing to the positive trend in revenues as well.Entertainment sales as a percentage of the total increased considerably thanks to business expansions. With its 50 per cent stake in Ticketcorner, Ringier now covers an important part of the entertainment value chain. Two other additions to business in this segment came with the founding of the artist management agency Pool Position and the concert organiser The Classical Company.Finally, Ringier shows its innovative powers most clearly with the trend in digital business.In 2010 a large number of new apps were launched for various platforms. In fact, they now number over 30 in Switzerland and Germany alone and include the Blick Sport or TV apps, the dating app CityKiss or the Gault Millau app.

Sales at Print Switzerland with the Swissprinters Group and the newspaper printing firm Print Adligenswil totalled CHF 349 million in a slight decline compared to the year.At the same time, Swissprinters set off in new directions that will help it to succeed in the highly competitive printing market. It grouped together its forces at its four locations under the single brand name Swissprinters and invested in new web offset printing presses.
An upswing is emerging in the Czech Republic, Slovakia and Serbia although not all markets in those countries have yet recovered from the crisis.The strong Swiss franc makes sales look like less but the situation in local currencies is definitely more positive.The Czech Republic, Slovakia, and Serbia have all improved their market position, recording sales of CHF 142.1 million, CHF 56 million and CHF 49.7 million, respectively. With the founding of the joint venture, Ringier is now present in all these markets with the leading tabloid newspaper in each respective country.In addition, Ringier captured the number one position in the Slovak online market with its acquisition of Azet.sk.

In Germany, Cicero and Monopol are faring well in the hotly contested reader and ad market. Cicero has now broken even.

Earnings at Ringier Hungary (CHF 94.2 million) reached pre-crisis levels in local currency despite a contracting ad market and declining circulation figures. The situation in Romania (CHF 25.8 million) remains highly taxing. Most publications are still losing ground in advertising and distribution revenues. The restructuring efforts initiated in 2009 had to be continued again in 2010 and entailed the sale of print publications and further layoffs. The market has probably bottomed out now. For 2011, we expect the overall situation in Romania to improve slightly.
Ringier Vietnam remains on track for success. Through the collaboration with Lagardère Active and the Women’s Entrepreneur Association, Ringier now holds the license for the Vietnamese issue of ELLE and is also successfully active in Vietnam in the cookery book segment. Ringier Vietnam is involved in various online projects as well.

Ringier China continues to grow thanks in part to the recovery in the Chinese ad market and its top seller Asia Inflight and in part to its success in developing a myriad of new websites and mobile apps.The Ringier Trade Media Group brought revenues back up to their pre-crisis level and nearly doubled online revenues.

The Ringier Annual Report is available in German, English and French.

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