ProSiebenSat.1 Q2 revenue down 25%
July 31, 2020
The global Covid-19 pandemic has had considerable impact on ProSiebenSat.1 Group’s business performance. In the second quarter of 2020, the German broadcasting group is seeing the first signs of recovery in the advertising business as of July, supported by the economic brightening in the Group’s core markets of Germany, Austria and Switzerland.
In the second quarter, the Group recorded a revenue decline of 25 per cent to €709 million (previous year: €947 million). Organically, revenues decreased by 26 per cent. As announced, this resulted in particular from the significant Covid-19 driven declines in the advertising and content production business, while NuCom Group’s revenues continued to grow, underscoring the importance of the Group’s diversified set-up. Performance in the second quarter affected the half-year period accordingly: Overall, ProSiebenSat.1 closed the first six months of 2020 with revenues of €1,634 million (previous year: €1,860 million), down 12 per cent year-on-year.
Rainer Beaujean, Chairman of the Executive Board and CFO, commented: “In our core markets of Germany, Austria and Switzerland, the economic environment is beginning to brighten, so we are seeing the first upward trend also in the advertising market as of July. We expect a decline of slightly less than 20 per cent in July advertising revenues compared to the previous year and thus a clearly lower decline than in the past quarter. There are also signs of a further improvement in August with a minus of around 10 per cent currently. At the same time, we continue to focus on our consequent cost and cash management and are looking more optimistically into autumn. Although it will not be possible to make up for the declines resulting from Covid-19 by then, the months from September to December will be decisive for the Group’s business performance in the full-year. In the past, ProSiebenSat.1 has generated around 50 per cent of its adjusted EBITDA in this period.”
In the second quarter, external revenues in the SevenOne Entertainment Group segment declined by 34 per cent to €398 million (previous year: €601 million). Organically, external revenues likewise decreased by 34 per cent. As announced, this almost exclusively reflects the decline in advertising revenues, as the Group saw lower advertising bookings in the second quarter due to Covid-19. In the first half of the year, external revenues declined by 19 per cent to €961 million (previous year: €1,180 million) as a result of the Covid-19 pandemic.
In contrast to the advertising market development, SevenOne Entertainment Group’s entertainment and infotainment offerings achieved clear success in recent months. In the second quarter, the channels scored particularly highly in the for advertising customers relevant prime time with high reach for local formats such as Promis unter Palmen (SAT.1) and The Masked Singer (ProSieben). The linear and digital viewing time of the offerings has increased accordingly. Since the start of the year, Total Video Viewtime – the total number of minutes viewed on all of the Group’s linear channels and digital entertainment platforms – has increased by 3.4 per cent year-on-year.
As announced, the effects of the governmental Covid-19 restrictions also made a clear impact on the Red Arrow Studios segment, with the international content production business being especially affected. In the second quarter, external revenues decreased by 31 per cent year-on-year to €102 million (previous year: €148 million). Organically, thus adjusted for currency effects, revenues declined by 33 per cent. In the first six months of the year, external revenues were down by 17 per cent to €236 million (previous year: €283 million), with the distribution business and the digital studio Studio71 developing stably.
In contrast, Nucom Group continued to grow in a Covid-19 influenced environment. The portfolio saw a 5 per cent increase in external revenues to €209 million (previous year: €198 million) in the second quarter. Organic growth was likewise 5 per cent. Parship Group’s matchmaking business and the Beauty & Lifestyle vertical around the online beauty provider Flaconi both saw a significant increase in revenues respectively. In contrast, the impact of the nearly global travel restrictions and lockdowns was clearly noticeable in the business of the portfolio companies billiger-mietwagen.de (Silvertours) and Jochen Schweizer mydays. NuCom Group also grew in the half-year period – external revenues increased by 10 per cent to €437 million (previous year: €397 million).
The other key financial figures also reflect the Covid-19 pandemic’s considerable impact on the macroeconomic environment and the Group’s business in the second quarter. The Group’s adjusted EBITDA decreased by 89 per cent to €23 million (previous year: €213 million) in the second quarter due to the decline in the high-margin advertising business. In the first half of 2020, adjusted EBITDA was 55 per cent lower than in the previous year at €180 million (previous year: €403 million). Adjusted net income reflected this development and amounted to minus €52 million (previous year: €85 million) in the second quarter and €7 million (previous year: €179 million) in the first six months of the year. The cost savings announced in spring are partly already visible in the second quarter, but will mostly become apparent in the second half of the year.
ProSiebenSat.1’s liquidity position continues to be good as of the end of June 2020, with €1,190 million in cash. At the beginning of April, the Group drew €350 million of its syndicated revolving credit facility (RCF) of €750 million in order to ensure access to the company’s liquidity reserves at all times in view of the Covid-19 environment. A further €400 million RCF is available to be drawn at any time. At the same time, the Annual General Meeting in June 2020 agreed to the proposal to carry forward the full amount of the balance sheet profits from financial year 2019 to the new accounting period and thus to not pay out a dividend in light of the Covid-19 pandemic. Liquidity outflow of €192 million was thereby avoided. As of the end of the second quarter of 2020, net financial debt had decreased year-on-year to €2,353 million (previous year: €2,514 million). Compared with the end of 2019, this is however a slight increase. The leverage ratio rose to 3.6x in the second quarter of 2020 (end of Q1 2020: 2.7x), primarily due to the decline in adjusted EBITDA as a result of Covid-19.