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Royal Wegener achieves sharp cost-cutting successes, while recovery is not yet visible in the advertising market
As reported earlier this year, Royal Wegener, the Dutch multimedia group, was confronted with a strong decline in advertising revenues in the period from July through October 2009. Compared to the same period of 2008, there was an autonomous decrease of 24%. The advertising sales decline for the 2009 first half was 24% also. Whilst a recovery in the advertising market is not yet in sight, rates of decline are showing some stability. Advertising revenues including PCM Lokale Media (acquired mid July 2009) decreased by 21%.
The effect of the decline in advertising sales on the operating result (before exceptional items) was substantially mitigated by the effects of the several cost-cutting measures. Cost reductions offset 75% of the decline in revenues in the period from July through October 2009; this figure was 70% for January through October.
Comparison of the autonomous figures excludes the effects of the sale of Wegener’s 37% interest in AD NieuwsMedia and the group’s printing facility in The Hague, along with purchase of PCM Lokale Media (door-to-door papers).
Advertising sales fell for both Wegener’s daily newspapers and the group’s free door-to-door newspapers, once again with the deepest decline in the recruitment (-54%) and automotive (-35%) segments of the market.
Developments in the past four months showed also a decrease of internet revenues, which were down compared to revenues for the same months of 2008, mainly due to less online recruitment ads for JobTrack. Revenues for AutoTrack showed limited growth, despite the severe circumstances in the automotive market.
Subscription revenues of the Wegener dailies rose by 1% between July and October 2009 compared with the same period in 2008. This figure includes a slight decline in the number of standard subscriptions offset by indexation of the subscription price.
Application of Wegener’s many cost-reducing measures remained in full force during the past four months. The Delta project, which involves combining all the group’s back-office activities, has largely been completed, the most striking effect being a reduction in personnel expenses. In addition, press renewal in Best and the closure of the printing units in Breda (end of 2008) and Nijmegen (June 2009) generated a decrease in graphic production costs.
In the period from July to October 2009, the total number of employees, on the basis of FTEs (full-time equivalents) declined by 11% on an autonomous basis, compared to the same period in 2008. The decline from January to October 2009 was 11% also.
On balance, the operating result before exceptional items for the period from July to October declined by 32% compared to the same period in 2008 (autonomous: -27%).
The period from January to October 2009 showed a decline of 34% (autonomous: -33%).
At the end of October 2009, Wegener’s net interest-bearing debt had risen by 3% compared with the level at 31 December 2008, partly due to seasonal influences in the amount of operating capital.
Sale of Wegener’s 37% holding in AD NieuwsMedia to PCM Uitgevers took effect in July. At the same time, the printing facility in The Hague was sold to PCM, while Wegener acquired PCM Lokale Media.
Also in July 2009, it was announced that Wegener and Dagblad De Pers had entered into a long-term collaborative venture. Wegener sells advertisements in De Pers, prints and distributes those newspapers, and performs a number of back-office activities.
The programme to renew and expand the printing presses in Best has almost been completed, and the three new press lines are now operating. With the closure of the printing unit in Nijmegen and the sale of the unit in The Hague, Wegener has concentrated its printing activities in three locations: Apeldoorn, Best and Enschede.
As announced on 11 November 2009, the previously announced merger of Koninklijke Wegener NV and LMG Netherlands I BV has been postponed for tax reasons. In a response to this postponement decision, shareholder Governance for Owners informed the Enterprise Chamber that, for the time being, this decision obviates the need for a preliminary injunction as requested at an earlier stage along with expressing urgent interest in conducting an inquiry into company affairs.
At the moment, no recovery is in sight for the advertising markets relevant for Wegener. Because economic prospects continue to be uncertain, no concrete forecast can be given as to results for the entire year of 2009.
Apeldoorn, The Netherlands, 17 November 2009
Management Board
Koninklijke Wegener NV
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Wegener producten
Dagbladen
7 regional newspapers and free daily De Pers. Daily reach of over 3 million people.
Huis-aan-huiskranten
Over 225 local door-to-door papers. Weekly reach of 6.8 million people.
Online
National network of news and special interest sites, monthly reach of 3,4 million people.
Speciaal Media
Concept and realization of print and new media products.
The job site for MBO and HBO, 800,000 monthly visitors and thousands of new jobs each week.
Site for new and used cars,
2.8 million monthly.
Website with daily local discount offers of at least 50%.
Producer of newspapers and newspaper-style magazines.
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