More on Emap
Emap full year results
Emap’s March trading statement already revealed the most important information, that the French magazine business (23% of operating profit) continued to do badly but sales were bottoming out while UK consumer magazines were growing strongly.
The performance of Emap’s radio stations has been reasonably good in the context of weak commercial radio audiences and pressure on radio advertising revenues. Total audiences in the last quarter were up slightly on both the previous quarter and year-on-year and advertising revenues were up 2%. However underlying performance has been a little weaker as the totals have benefited from the launch of a new analogue station and growth in the comparatively new digital stations. However all these represent organic growth, and as in the magazine business, Emap deserves credit for successful new launches.
However radio only generates c10% of operating profits and despite good performance from both it and Music TV the music division as a whole (Emap Performance, 16% of operating profits) were flat as a result of continued sharp declines in music and teen magazines.
The growth drivers were UK consumer magazines (30% of operating profit) and Emap Communications (business to business magazines, conferences and exhibitions; 32% of operating profit). UK magazine sales continued to grow, driven by recent (over the last few years) launches and Emap has now established a strong track record of successful launches. There is an extent to which launches of new titles such as celebrity magazines are replacing revenues lost by music magazines in that they new launches reflect the shift in consumer’s interests.
The magazines have seen little increase in advertising and revenue growth of 6% has largely been driven by growth in circulation revenues. However the more cyclical Emap Communications saw a 13% growth in underlying revenues, providing further evidence that parts of the media are benefitting from cyclical recovery while other face tough conditions.
So far this year growth seems to be following broadly similar pattern. The French magazine business appears to have stabilised but, even if revenues are flat on the previous quarters, the next half year will continue to show year-on-year declines.
The prospective PE of 13× (at 799p) would be cheap for the better businesses but it realistically reflects the mixed performance of the group as a whole. The 3% yield is reasonable.
The radio industry is consolidating but, given its size, Emap is more likely to be an acquirer so there is little support for the price to be found there.
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