Grupo Clarín Announces Fourth Quarter and

Full Year 2017 Results

 

Buenos Aires, Argentina, March 9, 2018 - Grupo Clarín S.A. ("Grupo Clarín" or the "Company" - LSE: GCLA; BCBA: GCLA), the largest media company in Argentina, announced today its fourth quarter and full year 2017 results. Figures in this report have been prepared in accordance with International Financial Reporting Standards ("IFRS") as of December 31, 2017, and are stated in Argentine Pesos, unless otherwise indicated.

 

Highlights ( FY17 vs. FY16):

§ Total Revenues reached Ps. 14,157.8   million, an increase of 24.4% compared to 2016 , mainly due to higher advertising and programming sales in the Broadcasting and Programming segment and, to a lesser extent, driven by higher circulation and advertising revenues in the Printing and Publishing segment.

§ Adjusted EBITDA ⁽¹⁾ reached Ps. 1,325.9 million, an increase of 37.3% compared to 2016 , mainly driven by higher EBITDA in the Broadcasting and Programming segment, partially offset by higher printing and distribution costs and severance payments in the Printing and Publishing segment.

§ Grupo Clarín's Adjusted EBITDA Margin ⁽²⁾ was 9.4% in 2017, compared to 8.5% in 2016 .

§ Income for the period totaled Ps. 2,641.1 million, a decrease of 36.8% compared to Ps. 4,179.6 million reported in 2016. Income for the period attributable to Equity Shareholders amounted Ps. 1,686.1 million in 2017 from Ps. 2,530.0 million in 2016, a decrease of 33.4%.

 

FINANCIAL HIGHLIGHTS

(In millions of Ps.)	2017	2016	% Ch.	4Q17	3Q17	4Q16	QoQ	YoY
Total Revenues	14,157.8	11,378.9	24.4%	4,116.8	3,759.2	3,461.4	9.5%	18.9%
Adjusted EBITDA (1)	1,325.9	965.7	37.3%	507.1	517.4	255.9	(2.0% )	98.2%
Adjusted EBITDA Margin (2)	9.4%	8.5%	10.4%	12.3%	13.8 %	7.4%	(10.5% )	66.7%
Income for the period	2,641.1	4,179.6	(36.8%)	(16.7 )	214.3	887.9	(107.8% )	(101.9%)
Attributable to:
Equity Shareholders	1,686.1	2,530.0	(33.4%)	(22.7)	214.6	534.6	(110.6% )	104.2%
Non-Controlling Interests	955.0	1,649.6	(42.1%)	6.0	(-0.3)	353.3	( 2,226.4%)	98.3%

 

(1)  We define Adjusted EBITDA as Total Revenues minus cost of sales (excluding depreciation and amortization) and selling and administrative expenses (excluding depreciation and amortization). We believe that Adjusted EBITDA is a meaningful measure of our performance. It is commonly used to analyze and compare media companies based on operating performance, leverage and liquidity. Nonetheless, Adjusted EBITDA is not a measure of net income or cash flow from operations and should not be considered as an alternative to net income, an indication of our financial performance, an alternative to cash flow from operating activities or a measure of liquidity. Other companies may compute Adjusted EBITDA in a different manner; therefore, Adjusted EBITDA as reported by other companies may not be comparable to Adjusted EBITDA as we report it.

(2) We define Adjusted EBITDA Margin as Adjusted EBITDA over Total Revenues .

OPERATING RESULTS  

 

Total Revenues reached Ps. 14,157.8 million, an increase of 24.4% from Ps. 11,378.9 million in 2016. Advertising revenues increased 23.5% and represented around 50% of the Total Revenues of the Company .

 

Following is a breakdown of Total Revenues by business segment:

 

REVENUES

 

(In millions of Ps.)	2017	2016	YoY	4Q17	3Q17	4Q16	QoQ	YoY
Printing and Publishing	6,669.1	5,775.8	15.5%	1,964.8	1,746.7	1,655.1	12.5%	18.7%
Broadcasting and Programming	6,560.7	4,899.9	33.9%	1,877.0	1,797.8	1,614.6	4.4%	16.3%
Digital Content and Others	1,738.0	1,268.0	37.1%	510.4	428.6	409.3	19.1%	24.7%
Subtotal	14,967.8	11,943.6	25.3%	4,352.2	3,973.2	3,679.0	9.5%	18.3%
Eliminations	(810.0)	(564.7)	43.4%	(235.5)	(213.9)	(217.6)	10.1%	8.2%
Total	14,157.8	11,378.9	24.4%	4,116.8	3,759.2	3,461.4	9.5%	18.9%

 

Cost of sales   (Excluding Depreciation and Amortization)   reached Ps. 8,574.8 million, an increase of 25.0% from Ps. 6,861.4 million reported in 2016 due to higher costs across all business segments, mainly in Broadcasting and Programming segment due to programming costs.

 

Selling and Administrative Expenses   (Excluding Depreciation and Amortization)   reached Ps. 4,257.1 million, an increase of 19.9% from Ps. 3,551.8 million in 2016. This increase was mainly due to higher salaries costs across all business segments, mainly in Printing and Publishing and in Broadcasting and Programming.

 

Adjusted EBITDA reached Ps. 1,325.9 million, an increase of 37.3% from Ps. 965.7 million reported for 2016. This result was driven by higher EBITDA and margin expansion in the Broadcasting and Programming segment, partially offset by negative EBITDA in in the Printing and Publishing segment, as result of the strategic cost reduction plan implemented this year.

 

Following is a breakdown of adjusted EBITDA by business segment:

 

ADJUSTED EBITDA

(In millions of Ps.)	2017	2016	YoY	4Q17	3Q17	4Q16	QoQ	YoY
Printing and Publishing	(205.3)	(104.7)	96.0%	42.7	21.5	(91.6)	98.3%	(146.6%)
Broadcasting and Programming	1,659.6	1,201.6	38.1%	495.3	535.2	424.6	(7.5%)	16.6%
Digital Content and Others	(128.3)	(131.1)	(2.1%)	(30.8)	(39.3)	(77.1)	21.5%	60.0%
Total	1,325.9	965.7	37.3 %	507.1	517.4	255.9	(2.0 %)	98.2%

 

 

Financial results net totaled Ps. (455.4) million compared to Ps. (398.2) million in 2016. T his increase of the negative result was mainly due to the impact of the peso depreciation on higher dollar denominated debt.

 

Equity in earnings from unconsolidated affiliates in 2017 totaled Ps. 48.1 million, compared to Ps. 48.7 million in 2016.

 

Other Income (expenses), net reached Ps. 77.8 million, compared to Ps. 55.5 million in 2016.

 

Income tax as of December 2017 reached Ps. (477.8 ) million, from Ps. (264.2) million in 2016.

 

Income from Discontinued Operations, reached Ps. 2,366.6 million in 2017 (four months of Cablevision's results are included), compared to Ps. 3,955.5 million in 2016. 

 

Income for the period totaled Ps. 2,641.1 million, a decrease of 36.8% from Ps.  4,179.6   million reported in 2016. This was mainly a consequence of lower results of discontinued operations, four months of Cablevisión S.A.'s results were considered in 2017, while in the same period of 2016, this line item reflected the results of twelve months. The Equity Shareholders Income for the period amounted to Ps. 1,686.1million, a decrease of 33.4% compared with December 2016 .

 

Cash used in acquisitions of property, plant and equipment (CAPEX)   totaled Ps. 383.9 million in 2017, an increase of 23.3%   from Ps. 311.4 million reported in 2016. Out of the total CAPEX in 2017, 75.4% was allocated towards the Broadcasting and Programming segment, 17.8% to the Printing and Publishing segment and the remaining 6.9% to other activities.

 

Debt profile ⁽¹⁾:   Debt coverage ratio for the period ended December 31, 2017 was .51x and the Net Debt at the end of this period totaled Ps. (18.2 ) million.

 

⁽¹⁾ Debt Coverage Ratio is defined as Total Financial Debt divided by Adjusted EBITDA (Last Quarter Annualized). Total Financial debt is defined as financial loans and debt for acquisitions, including accrued interest.

 

 

SALES BREAKDOWN BY SOURCE OF REVENUE - DECEMBER 2017

 

(In millions of Ps.)	Printing & Publishing	Broadcasting & Programming	Digital Content & Others	Eliminations	Total	%
Advertising	2,614.1	4,684.6	53.1	(201.0)	7,150.8	50.5%
Circulation	3,462.7	-	-	-	3,462.7	24.5%
Printing	275.1	-	-	(4.3)	270.8	1.9%
Programming	-	1,229.4	-	(0.3)	1,229.1	8.7%
Other Sales	317.2	646.7	1,684.9	(604.4)	2,044.4	14.4%
Total Sales	6,669.1	6,560.7	1,738.0	(810.0)	14,157.8	100.0%

 

SALES BREAKDOWN BY SOURCE OF REVENUE - DECEMBER 2016

 

(In millions of Ps.)	Printing & Publishing	Broadcasting & Programming	Digital Content & Others	Eliminations	Total	%
Advertising	2,374.8	3,513.1	103.9	(201.4)	5,790.4	50.9%
Circulation	2,548.3	-	-	(17.1)	2,531.2	22.2%
Printing	361.5	-	-	(0.6)	361.0	3.2%
Programming	-	942.5	-	-	942.5	8.3%
Other Sales	491.1	444.3	1,164.1	(345.6)	1,753.8	15.4%
Total Sales	5,775.8  491.1	4,899.9  444.3	1,268.0  1,164.1	(564.7) (345.6)	11,378.9  1,753.8	100.0%

 

   

RESULTS BY BUSINESS SEGMENT

 

BROADCASTING AND PROGRAMMING

 

Revenues

Revenues increased by 33.9% to Ps. 6,560.7 million in 2017, compared to Ps. 4,899.9 million in 2016 due to the strong performance of Channel 13 and Radio Mitre. Advertising revenues increased 33% compared to the 2016 period reflecting higher ratings in our TV signals, the Company was able to capture the growth in the advertising market due to its value-added proposal.

 

Cost of Sales (Excluding Depreciation and Amortization)

Cost of sales increased by 37.4% to Ps. 3,752.0 million in 2017, compared to Ps. 2,731.0 million in 2016. This is mainly attributable to higher programming costs, salaries and co-productions. The Company's efforts to produce superior content derived in higher revenues.

 

Selling and Administrative Expenses (Excluding Depreciation and Amortization)

Selling and administrative expenses increased by 18.8% to Ps. 1,149.0 million in 2017, compared to Ps. 967.3 million in 2016. The increase was primarily the result of higher salaries and fees for services.  

 

Depreciation and Amortization

Depreciation and amortization expenses increased by 47.9% to Ps. 98.0 million in 2017 compared to Ps. 66.3 million reported in 2016.

 

PRINTING AND PUBLISHING

 

Revenues

Total revenues increased by 15.5% to Ps. 6,669.1 million in 2017, mainly as a result of higher sales in circulation and advertising.  

 

Cost of Sales (Excluding Depreciation and Amortization)

Cost of sales increased by 14.3% to Ps. 3,950.6 million in 2017, compared to Ps. 3,455.9 million in 2016. The increase was mainly the result of higher printing costs and severance payments.

 

Selling and Administrative Expenses (Excluding Depreciation and Amortization)

Selling and administrative expenses increased by 20.6% to Ps. 2,923.9   million in 2017, compared to the Ps. 2,424.6 million reported in 2016. This was primarily the result of higher distribution and marketing costs and fees for services.

 

Depreciation and Amortization

Depreciation and amortization expenses increased by 27.4% to Ps. 113.0 million in 2017 compared to                  Ps. 88.7 million in 2016.

 

DIGITAL CONTENT AND OTHERS

 

Total revenues in this segment were driven by administrative and corporate services rendered by the Company and its subsidiary GC Gestión Compartida S.A. to third parties, as well as to other subsidiaries of the Company (which are eliminated in the consolidation). Additionally, this segment includes the production of digital content, e-commerce and the organization of trade fairs and exhibitions. Cost of sales (excluding depreciation and amortization) was mainly the result of salaries and professional consulting fees.

 

In this period, total revenues increased 37.1% to Ps. 1,738.0, from Ps. 1,268.0 million reported in 2016, due to higher sales in digital content, e-commerce, Gestión Compartida and revenues from trade fairs and exhibitions business.  EBITDA resulted in Ps.  (128.3 ) million.  

 

OPERATING STATISTICS BY BUSINESS SEGMENT

 

BROADCASTING AND PROGRAMMING

	2017	2016	YoY	4Q17	3Q17	4Q16	QoQ	YoY
Advertising Share % (1)	40.0%	39.5%	1.3%	42.8%	40.0%	39.4%	7.0%	8.8%
Audience Share % (2)
Prime Time	38.3%	34.8%	10.1%	40.8%	42.5%	38.9%	(3.9% )	5.0%
Total Time	33.7%	32.0%	5.6%	35.2%	35.7%	33.6%	(1.4% )	4.9%

 

⁽¹⁾   Company estimate, over ad spend in Ps. In broadcast TV for AMBA region.

 ⁽²⁾   Share of broadcast TV audience according to IBOPE for AMBA. PrimeTime is defined as Monday through Friday from 8pm to 12am. Total Time is defined as Monday through Sunday from 12 pm to 12 am.

 

PRINTING AND PUBLISHING

	2017	2016	YoY	4Q17	3Q17	4Q16	QoQ	YoY
Circulation (1)	219.8	237.1	(7.3%)	233.2	217.6	230.3	7.1%	1.2%
Circulation share % (2)	39.5%	40.7%	(3.0 %)	39.7%	39.5%	41.0%	0.7%	(3.0 %)
Advertising  share %(3)	52.2%	52.6%	(0.9 %)	53.1%	53.8%	51.2%	(1.3% )	3.8%

 

⁽¹⁾   Average number of copies according to IVC (including Diario Clarín and Olé)

⁽²⁾   Share in Buenos Aires and Greater Buenos Aires Area (AMBA) Diario Clarín. Source: AGEA and IVC.

⁽³⁾   Share in Buenos Aires and Greater Buenos Aires Area (AMBA) Diario Clarín. Source: Monitor de Medios Publicitarios S.A.

 

DIGITAL CONTENT AND OTHERS

	2017	2016	YoY
Page Views (1)	1,140.9	938.5	21.6%
Mobile page Views	599.7	397.3	50.1%

⁽¹⁾ In millions. Average. Source DAX and Company Estimates.

 

DEBT AND LIQUIDITY

(In millions of Ps.)	December 2017	December  2016	% Change	September  2017	% Change
Short Term and Long Term Debt
Current Financial Debt	487.1	354.0	37.6%	637.8	(23.6% )
Financial loans	309.1	134.1	130.6%	218.3	41.6%
Accrued interest	10.3	3.5	193.9%	13.7	(24.8% )
Acquisition of equipment	4.6	3.6	29.6%	4.6	2.0%
Sellers Financing Capital	0.0	14.3	(100.0% )	0.1	(87.0% )
Related Parties Capital	-	-	NA	-	NA
Bank overdraft	163.0	198.6	(17.9% )	401.2	(59.4% )
Non-Current Financial Debt	546.8	469.2	16.5%	607.9	(10.1% )
Financial loans	531.6	83.4	537.5%	592.1	(10.2% )
Acquisition of equipment	4.4	8.5	(48.7% )	5.6	(21.8% )
Related Parties Capital	10.8	377.3	(97.1 %)	10.2	5.9%
Total Financial Debt (A)	1,033.9	823.2	25.6%	1,245.7	(17.0% )
Total Short Term and Long Term Debt	1,033.9	823.2	25.6%	1,245.7	(17.0% )
Cash and Cash Equivalents (B)	1,052.1	721.8	45.8%	960.7	9.5%
Net Debt (A) - (B)	(18.2 )	101.4	(118.0% )	285.0	(106.4% )
Net Debt/Adjusted Ebitda (1)	( 0.01x)	0.10x	(109.1% )	0.14x	(106.5% )

 

Total Financial Debt⁽¹⁾, increased from Ps . 823.2 million to Ps. 1,033.9 million. This represents an increase of 25.6% in the Total Debt.

 

Debt coverage ratio ⁽¹⁾ as of December 31, 2017 was 0.5x in terms of Total Financial Debt.

 

⁽¹⁾ Debt Coverage Ratio is defined as Total Financial Debt divided by Adjusted EBITDA (Last Quarter Annualized). Total Financial debt is defined as financial loans and debt for acquisitions, including accrued interest.

 

STOCK AND MARKET INFORMATION

 

Grupo Clarín trades its stock in the Buenos Aires Stock Exchange (BCBA) and in the London Stock Exchange (LSE), in the form of shares and GDS's, respectively.

 

GCLA (BCBA) Price per Share (ARS)	62.6
GCLA (LSE) Price per GDS (USD)	6.0
Total Shares	106,776,004
Total GDSs	53,388,002
Market Value (USD MM)	320.3
Closing Price	March 9th, 2018

 

CONFERENCE CALL AND WEBCAST INFORMATION

 

Grupo Clarín S.A. will host a conference call and webcast presentation to discuss its results for the fourth Quarter of 2017 on Monday, March 12, 2018.

 

Time: 12:00pm Buenos Aires Time/3:00pm London Time/11:00am New York Time

 

To access the conference call, please dial:

Argentina Participants: 0-800-666-0250

U.S. Participants: 1-877-888-4312

All other countries: 1-785-424-1876

Passcode: CLARIN

 

To access the simultaneous webcast presentation, please go to:

https://www.webcaster4.com/Webcast/Page/1117/24826

 

 

There will be a replay available, for two weeks, starting five hours after the conclusion of the conference call. To access the replay, please dial 1-844-488-7474 toll free from the U.S., or 1-862-902-0129 from anywhere outside the U.S. The replay passcode is: 10140289

 

The webcast presentation will be archived at http://www.grupoclarin.com.ar/ir

 

Investor Relations Contacts
In Buenos Aires:	In London:	In New York:
Agustín Medina Manson Patricio Gentile	Alex Money	Melanie Carpenter
Grupo Clarín S.A.	Jasford IR	I-advize Corporate Communications
Tel: +54 11 4309 7215	Tel: +44 20 3289 5300	Tel: +1 212 406 3692
Email: [email protected]	E-mail: [email protected]	E-mail: [email protected]

 

 

ABOUT THE COMPANY

 

Grupo Clarín is the largest media company in Argentina and a leading company in printing and publishing and broadcasting and programming markets. Its flagship newspaper -Diario Clarín- is one of the highest circulation newspapers in Latin America. Grupo Clarín is the largest producer of media content in Argentina, including news, sports and entertainment and reaches substantially all segments of the Argentine population in terms of wealth, geography and age.

 

Disclaimer

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Grupo Clarín. You can identify forward-looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could", "may" or "might" the negative of such terms or other similar expressions. These statements are only predictions and actual events or results may differ materially. Grupo Clarín does not intend to or undertake any obligation to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in Grupo Clarín's projections or forward-looking statements, including, among others, general economic conditions, Grupo Clarín's competitive environment, risks associated with operating in Argentina a, rapid technological and market change, and other factors specifically related to Grupo Clarín and its operations.

 

GRUPO CLARÍN S.A.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 20 16

In Argentine Pesos (Ps.)

	December 31, 2017		December 31, 2016
Revenues	14,157,841,372		11,378,887,347
Cost of Sales (1)	(8,766,746,469)		(7,003,551,922)
Subtotal - Gross Profit	5,391,094,903		4,375,335,425
Selling Expenses (1)	(2,173,277,875)		(1,728,968,802)
Administrative Expenses (1)	(2,135,953,570)		(1,864,144,211)
Other Income and Expenses, net	77,752,601		55,465,753
Financial Costs	(255,977,492)		(267,623,007)
Other Financial Results, net	(199,467,469)		(130,553,073)
Financial Results	(455,444,961)		(398,176,080)
Equity in Earnings from Associates	48,107,430		48,725,499
Income before Income Tax and Tax on Assets	752,278,528		488,237,584
Income Tax and Tax on Assets	(477,772,896)		(264,157,883)
Income for the period from continuing operations	274,505,632		224,079,701
Discontinued Operations
Net Income from Discontinued Operations	2,366,560,702		3,955,531,485
Net Income for the Year	2,641,066,334		4,179,611,186
Other Comprehensive Income
Items which can be reclassified to net income
Variation in Translation Differences of Foreign Operations from Continuing Operations	1,983,567		8,803,638
Variation in Translation Differences of Foreign Operations from Discontinued Operations	(77,530,768)		422,449,177
Other Comprehensive Income for the Year	(75,547,201)		431,252,815
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	2,565,519,133		4,610,864,001
Profit Attributable to:
Shareholders of the Parent Company	1,686,091,799		2,530,041,832
Non-Controlling Interests	954,974,535		1,649,569,354
Total Comprehensive Income Attributable to:
Shareholders of the Parent Company	1,658,024,021		2,748,667,739
Non-Controlling Interests	907,495,112		1,862,196,262
Basic and Diluted Earnings per Share from Continuing Operations (2)	1.68		0.82
Basic and Diluted Earnings per Share from Discontinued Operations (2)	8.42		7.98
Basic and Diluted Earnings per Share - Total (2)	10.10		8.80

 

 

⁽¹⁾ Includes amortization of intangible assets and film library, and depreciation of property, plant and equipment in the amount of Ps. 244,077,545 and
Ps. 183,484,509 for the years ended December 31, 2017 and 2016, respectively.

⁽²⁾ See Note 17.

The Consolidated Statements of Operations for each business segment are included in the Financial Statements as of December 31, available at http://www.grupoclarin.com/ir .

 

 

GRUPO CLARÍN S.A.

CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2017 AND 2016

In Argentine Pesos (Ps.)

 

	December 31, 2017		December 31, 2016
ASSETS
NON-CURRENT ASSETS
Property, Plant and Equipment	992,612,264		780,775,774
Intangible Assets	233,562,017		221,713,090
Goodwill	269,817,944		270,923,529
Deferred Tax Assets	619,543,526		532,896,812
Investments in Unconsolidated Affiliates	375,989,230		368,314,257
Other Investments	-		7,412,878
Inventories	21,579,780		15,805,039
Other Assets	6,639,302		2,122,552
Other Receivables	210,579,583		159,206,993
Trade Receivables	90,581,080		99,857,137
Total Non-Current Assets	2,820,904,726		2,459,028,061
CURRENT ASSETS
Inventories	677,237,703		901,013,829
Other Assets	68,198,975		11,838,743
Other Receivables	590,218,759		486,550,805
Trade Receivables	4,776,942,928		3,582,782,739
Other Investments	701,760,111		328,346,695
Cash and Banks	356,729,917		416,006,084
Total Current Assets	7,171,088,393		5,726,538,895
Assets Held for Distribution to Shareholders	-		28,082,220,838
Total Assets	9,991,993,119		36,267,787,794
EQUITY (as per the corresponding statement)
Attributable to Shareholders of the Parent Company
Shareholders' Contributions	746,952,203		2,010,638,503
Other Items	(23,046,305)		755,638,189
Accumulated Income	3,465,192,314		6,860,110,364
Total Attributable to Shareholders of the Parent Company	4,189,098,212		9,626,387,056
Attributable to Non-Controlling Interests	39,531,594		4,416,373,963
Total Shareholders' Equity	4,228,629,806		14,042,761,019
LIABILITIES
NON-CURRENT LIABILITIES
Provisions and Other Charges	316,110,037		228,252,293
Debt	546,818,756		469,172,621
Deferred Tax Liabilities	-		209,849
Taxes Payable	54,841,073		59,188,405
Other Liabilities	65,394,982		61,662,068
Trade Payables and Other	60,504,175		27,347,968
Total Non-Current Liabilities	1,043,669,023		845,833,204
CURRENT LIABILITIES
Debt	487,080,017		339,731,089
Seller Financings	6,500		14,256,467
Taxes Payable	407,679,158		296,868,894
Other Liabilities	462,533,761		508,464,913
Trade Payables and Other	3,362,394,854		2,958,209,807
Total Current Liabilities	4,719,694,290		4,117,531,170
Liabilities Held for Distribution to Shareholders	-		17,261,662,401
Total Liabilities	5,763,363,313		22,225,026,775
Total Equity and Liabilities	9,991,993,119		36,267,787,794