COVID-19 update: ProSiebenSat.1 withdraws 2020 outlook and 2019 dividend proposal
Preliminary Q1 financials and FY 2020 outlook
- Release of preliminary Q1 2020 financials: satisfying performance across Group until mid-March, then first effects of COVID-19 crisis visible
o Group revenues about stable at EUR 926 million
o Group adjusted EBITDA declines from EUR 190 million to EUR 157 million
o Group adjusted net income decreases from EUR 94 million to EUR 58 million
- Due to lack of visibility on COVID-19 related impacts and economic uncertainty for remainder of the year, ProSiebenSat.1 withdraws 2020 financial outlook
- Solid liquidity position as per March 31, 2020: EUR 898 million cash on balance sheet; in addition, EUR 350 million RCF drawn beginning of April, remaining part of RCF with EUR 400 million available any time; covenant-free debt documentation
2020 AGM and 2019 dividend proposal
- ProSiebenSat.1 confirms scheduled date for AGM on June 10, 2020, but will hold event as non-physical AGM due to governmental COVID-19 lockdown measures; invitation to AGM to be published on April 28, 2020
- ProSiebenSat.1 confirms its current dividend policy with a pay-out-ratio of 50% of adjusted Group net income but withdraws initial 2019 dividend proposal
Unterfoehring, April 22, 2020. Rainer Beaujean, Chairman of the Executive Board & Chief Financial Officer of ProSiebenSat.1 Media SE: “The overall health and well-being of our people is ProSiebenSat.1’s top priority and we are and will be doing everything to take care of them while respecting all governmental regulations and recommendations. We continue to closely monitor the evolving COVID-19 situation and its impact on ProSiebenSat.1. Our business was well on track until mid-March when first COVID-19 effects started to affect our performance across all segments. As the duration and full implications of the pandemic still remain uncertain, it is impossible to provide forecasts on our full-year results at this moment. Therefore, we decided to withdraw our financial outlook for 2020 as well as the 2019 dividend proposal. We are extremely focused on cost, liquidity and cash flow management to protect our business and build a base for its future so that we can execute our strategy with a priority on our entertainment business with full speed once the situation has normalized.”
Preliminary Q1 2020 Financials & Financial Outlook FY 2020
While ProSiebenSat.1 recorded a satisfying financial performance until mid-March 2020, the overall financial results of the first quarter already saw the first effects of COVID-19 related restrictions on public life and the economy with Group revenues growing only slightly by 1% to EUR 926 million (previous year: EUR 913 million). Against the backdrop of governmental lockdown measures increasingly affecting advertising customers during the second half of March, high margin SevenOne Entertainment Group’s external segment revenues decreased by 3% to EUR 563 million (previous year: EUR 579 million) with total advertising revenues down by 4% following first cancellations of advertising bookings. The global limitations were also having an impact on Red Arrow Studios as local and international productions are being put on hold or postponed. Due to the growing business of digital studio Studio71, external revenues in the Red Arrow Studios segment however came in almost flat with minus 0.5% at EUR 134 million (previous year: EUR 135 million). NuCom Group’s external segment revenues grew by 15% to EUR 228 million (previous year: EUR 199 million) benefitting from further growth of online beauty provider Flaconi and initial consolidation effects of Aroundhome, an online broker for products and services related to the home. Given that the Group primarily grew in lower-margin businesses and against that recorded a decline in its high-margin advertising business, Group adjusted EBITDA fell 17% to EUR 157 million (previous year: EUR 190 million) in the first quarter of 2020. Group adjusted net income reflected this development and decreased from EUR 94 million to EUR 58 million.
Entering the second quarter, the Group expects trading across all segments to be heavily impacted by the crisis: in April 2020, TV core advertising revenues are expected to be down by c. 40% compared to the previous year. Red Arrow Studios’ business continues to be impacted by postponements of productions, while at NuCom Group, ProSiebenSat.1 sees a mixed picture as some assets are more affected by the restrictions of public life than others. Overall, NuCom Group benefits from its diversified portfolio set-up in this situation.
As announced in March 2020, the Group’s financial outlook 2020 was explicitly made without considering the possible negative implications of the corona pandemic. Due to the current standstill of the global economy and consequential significant economic uncertainty, it is currently not possible to provide an outlook on the financial performance in the second quarter and the full-year. The Executive Board thus decided to withdraw the financial outlook for 2020 until the situation becomes clearer.
Overall, the management has implemented business continuity plans and is very focused on actively managing the Group’s cost base, cash flow and profitability with various measures. These include investments in program being cut back by approximately EUR 50 million compared to last year, as well as the mostly variable costs in Red Arrow Studios’ production business. With the Group already making use of the German instrument of short-time work (1) in some NuCom Group assets, ProSiebenSat.1 is also evaluating further application within the Entertainment business. This way, the Group is preparing for different scenarios to be able to cope with a potentially longer-lasting crisis and subsequent recovery period. ProSiebenSat.1 will provide more details on the implemented measures at its Q1 quarterly call on May 7, 2020. While carefully deciding on and monitoring ongoing investments in 2020, the Group will at the same time continue to execute its strategy with a primary focus on its operating Entertainment business in the German-speaking region.
Financial Position & Dividend
The Group’s liquidity position remains solid: as per March 31, 2020, ProSiebenSat.1 had a cash position of EUR 898 million on the balance sheet. In addition, the Group has drawn EUR 350 million of its syndicated revolving credit facility (RCF) at the beginning of April to ensure access to the company's liquidity reserves at all times in view of the COVID-19 environment. A further EUR 400 million RCF is available to be drawn at any time. Its financing instruments are without financial covenant obligations and have a remaining volume-weighted tenor of over three years with final maturities in 2024/26. As per end of the first quarter 2020, ProSiebenSat.1 Group’s gross debt position was EUR 3,192 million, the net financial debt position was EUR 2,294 million and the leverage 2.7x.
Due to the significant uncertainty over the business development in the coming months resulting from the further evolution of the corona pandemic, ProSiebenSat.1 decided to take further action to best protect its business and people. To manage and further preserve liquidity also in a possibly longer-lasting COVID-19 crisis, the Executive Board and the Supervisory Board decided to propose to the Annual General Meeting to not pay-out a dividend for fiscal year 2019. Initially, the Company had announced to propose a dividend of EUR 0.85 per share to the Annual General Meeting. The Group is taking this one-off measure to secure an additional liquidity of EUR 192 million while confirming its current dividend policy with a pay-out-ratio of 50% of adjusted Group net income.
Annual General Meeting
ProSiebenSat.1 confirms June 10, 2020, as scheduled date for its Annual General Meeting (AGM). However, due to the continued spread of COVID-19, the related governmental lockdown measures and with the health of shareholders and employees being the top priority, ProSiebenSat.1 decided to hold the event as a non-physical AGM. Details on broadcast, question and voting rights will be published in the official AGM invitation on the Company’s website as of April 28, 2020.
(1) Short-time work allows a company to reduce working hours for up to 12 months with a corresponding reduction in pay in order to reduce the company’s personnel costs while securing employment. The reduced remuneration of the employees is compensated by the government.
Corporate Communications | Corporate & Finance CommunicationStefanie Rupp-MenedetterHead of Group Communications & EventPhone: +49 89 9507-2598Stefanie.Rupp@ProSiebenSat1.com
Corporate Communications | Corporate & Finance Communication | Content ProductionSusanne BrieuHead of Corporate Communications Strategy & Finance, Communication Red Arrow StudiosPhone: +49 89 9507-1137Susanne.Brieu@prosiebensat1.com