EMAP ‘Cautiously Optimistic’ On Future Trading
UK consumer advertising is trading well, whilst radio advertising conditions remain tough, according to year-end financial results released by EMAP this morning. The results are pretty much in line with the outlook given in the group’s trading statement in March (see EMAP Says Consumer Mags Revenue Stable, Radio Remains Weak).
EMAP Consumer Media The consumer media division showed a ‘resilient’ advertising performance and pre-digital turnover rose by 4%, according to the results.
Advertising grew by 2% against a largely flat overall market; circulations were up 6%, helping EMAP to increase its share of retail sales value, as measure by the Audit Bureau of Circulations (ABC), from 17.0% to 18.1%.
EMAP Communications The business to business (B2B) division of EMAP saw a fairly stable underlying performance, although turnover fell 8% and profit 11%. This is mainly due to the sale of the EMAP’s B2B company in Germany last year.
Recruitment advertising started the year well but came under pressure from the second quarter onwards, finishing 2% up on an underlying basis for the year. Display advertising, down 10% across the year on an underlying basis, reflects the tendency for B2B advertising budgets to be first hit when corporate profits come under pressure, said the statement. Markets which have suffered most in this regard are media and telecoms, while titles serving Government supported industries have been much stronger.
EMAP Performance The group’s music and radio division suffered from weak radio advertising conditions. Revenues fell by 5% to £139.0 million and operating profit dropped by 11% to £41.0 million.
Radio advertising revenues were down 11% for the year. GWR Group, which released its year-end financial results yesterday, saw ad revenues decline by 7.2% over the same period (see City News). This compares to radio industry declines of 14% for national advertising and 2% for local, an 8% decline overall for the year to March 2002.
The group’s underperformance in radio is a result of its higher exposure to national advertising. Scottish Radio Holdings, for example, has a higher gearing toward local advertising and so is less affected by the national downturn (see City News).
Outlook There are signs that in Q1 of the new fiscal year market conditions for certain of the Group’s businesses are improving, the company said this morning.
In the UK, consumer magazine advertising is showing good underlying growth in the first two months of the year and although circulation performance is mixed, copy sales from the key titles remain strong.
EMAP says there is little evidence of any real recovery in radio advertising and airtime revenues are expected to show negative growth in Q1 of the new fiscal year. TV revenues, as yet a small part of the total business, continue to grow significantly.
Business to business trade recruitment advertising remains quite volatile but overall EMAP Communications is seeing modest growth. Display advertising remains tough, although year on year comparisons are less demanding.
EMAP’s Board is therefore progressing with ‘cautious optimism’ for the year ahead.
At 11:00am today shares in EMAP were up 24½p at 870½p.