GCLA.L Regulatory News (GCLA)

11 Mar 2009 11:24



Grupo Clarín announces its 

Fourth Quarter and Full Year Results for 2008 

Buenos Aires, Argentina, March 11, 2009 - 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 results for 2008. Figures in this report have been prepared in accordance with Argentine GAAP as of December 31, 2008 and are stated in Argentine Pesos, unless otherwise indicated.

Highlights (2008 vs. 2007):

Net Sales totaled Ps. 5,736.1 million, an increase of 30.9% from 2007, mainly due to subscriber and ARPU growth in the Cable TV and Internet segment and, to a lesser extent, to higher advertising sales in Printing and Publishing, and higher advertising and programming sales in the Broadcasting and Programming segment.

Adjusted EBITDA(1)  reached Ps. 1,674.6 million, an increase of 24.0% from 2007, driven by higher sales in the Cable and Internet, Printing and Publishing and Broadcasting and Programming segments.

Grupo Clarín's Adjusted EBITDA Margin (2) was 29.2% for 2008, compared to 30.8% in 2007.

Net Income totaled Ps. 262.7 million, an increase of 25.4% from Ps. 209.6 million reported in 2007.

Comments from the Vice Chairman of Grupo Clarín:

Mr. José A. Aranda, Vice Chairman of Grupo Clarín, stated, "I am pleased to report Grupo Clarín's results for the fourth quarter and full year of 2008. Our Company showed a good performance, especially in the Cable TV and Internet access segment. These overall results are of significance in a harsh context in which companies are facing global macroeconomic and financial challenges, and are eloquent in demonstrating the proven ability of our management team to steer through defiant environments. During 2009, in a year of macroeconomic uncertainties, we will strive to carry out our strategy and to consolidate the Company's leadership in its businesses."  

FINANCIAL HIGHLIGHTS 

(1) We define Adjusted EBITDA as net sales 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 on the basis of 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. Because Adjusted EBITDA is not an Argentine GAAP measure, 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 Net Sales.

Net sales reached Ps. 5,736.1 million, an increase of 30.9% from Ps. 4,383.7 million in 2007 due to subscriber and ARPU growth in the Cable TV and Internet segment and, to a lesser extent, to higher advertising sales in Printing and Publishing, and higher advertising and programming sales in the Broadcasting and Programming segment.

Following is a breakdown of Net Sales by business segment:

NET SALES

Cost of sales (Excluding Depreciation and Amortization) reached Ps. 2,799.5 million, an increase of 31.7% from Ps. 2,125.2 million reported for 2007 due to higher costs in our business segments, mainly in Cable TV and Internet access due to subscriber growth, but also in the Printing and Publishing and Broadcasting and Programming segments. 

Selling and Administrative Expenses (Excluding Depreciation and Amortization) reached Ps. 1,262.0 million, an increase of 39.0% from Ps. 907.7 million in 2007. This increase was mainly due to higher costs in both Printing and Publishing and Cable TV and Internet access segments. 

Financial results net totaled Ps. (517.2) million from Ps. (448.3) million for 2007, the decrease was mainly due to the peso depreciation during 2008.

Equity in earnings from unconsolidated affiliates in 2008 totaled Ps. 9.3 million, compared to Ps. 7.2 million for 2007. 

Other expenses, net reached Ps. (16.6) million, compared to Ps. (21.4) million in 2007.

Adjusted EBITDA reached Ps. 1,674.6 million, an increase of 24.0% from Ps. 1,350.8 million reported for 2007, driven by higher sales in the Cable and Internet, Printing and Publishing and Broadcasting and Programming segments, partially offset by increasing costs.

Following is a breakdown of adjusted EBITDA by business segment:

ADJUSTED EBITDA 

Net income totaled Ps. 262.7 million, an increase of 25.4% from Ps. 209.6 million reported for 2007, due to higher Adjusted EBITDA mainly generated by the Cable TV and Internet access and the Printing and Publishing segments partially offset by the effect of the peso depreciation over the net debt. 

Income tax as of December 2008, reached Ps. 299.7 million, from Ps. 200.7 million in 2007.

Cash used in acquisitions of property, plant and equipment (CAPEX) totaled Ps. 847.5 million in 2008, an increase of 47.2% from Ps. 575.9 million reported for 2007. Out of the total CAPEX in 2008, 88.1% was allocated to the Cable TV and Internet access segment, 7.3% to the Printing and Publishing segment and the remaining 4.6% to other activities. Our Capex in the Cable TV and Internet access segment contemplates network upgrades, digitalization, subscriber growth and further development of the triple play strategy. 

Debt profile (1): Debt coverage ratio for the period ended December 31, 2008, was 1.5 x while Net Debt at the end of this period totaled Ps. 2,589.8 million. 

(1) Debt Coverage Ratio is defined as Total Financial Debt minus Cash and Equivalents divided by Adjusted EBITDA (last 12 months). Total Financial debt is defined as financial loans and debt for acquisitions, including accrued interest.

SALES BREAKDOWN BY SOURCE OF REVENUE - DECEMBER 2008

SALES BREAKDOWN BY SOURCE OF REVENUE - DECEMBER 2007

RE

SULTS BY BUSINESS SEGMENT

CABLE TV AND INTERNET ACCESS

Net Sales

Net sales increased by 30.8% to Ps. 3,417.5 million for 2008 compared to Ps. 2,613.0 million for 2007. The increase in net sales was mostly attributable to the annualization of the increase in subscription charges in 2007 and the increase in prices during 2008, and to growth in Cable, Broadband and Digital subscribers. Total Cable TV basic subscribers reached 3,190,570 as of December 2008, compared to the 3,022,338 reported in the same date in 2007. Internet subscribers reached 938,787 in 2008, compared to the 758,168 of 2007.

Cost of Sales (Excluding Depreciation and Amortization) 

Cost of sales (excluding depreciation and amortization) increased by 30.1% to Ps. 1,461.2 million for 2008, compared to Ps. 1,123.2 million for 2007. This was mainly due to the increase in our programming costs attributable to growth in our subscriber base and pricing adjustments linked to basic monthly fee increases -contemplated in certain programming contracts-, the effect of salary increases and social security, higher expenses for maintenance of property, plant and equipment and network expenses. 

Selling and Administrative Expenses (Excluding Depreciation and Amortization) 

Selling and administrative expenses (excluding depreciation and amortization) increased by 26.8% to Ps.760.8 million for 2008, compared to Ps. 599.9 million reported in 2007. This increase was mainly due to the increase in expenses for salaries, social security charges and taxes, and was partially offset by lower management fees paid during the period.

Depreciation and Amortization

Depreciation and amortization expenses increased by 11.2% to Ps. 393.4 million for 2008 from Ps. 353.9 million reported in 2007. 

PRINTING AND PUBLISHING

Net Sales

Net sales increased by 29.5% to Ps. 1,519.9 million in 2008, compared to Ps. 1,173.5 million in 2007. This was the result of higher sales in advertising and optional products, higher sales in our commercial printing company, and the consolidation of the increased ownership in Papel Prensa.

Cost of Sales (Excluding Depreciation and Amortization)

Cost of sales (excluding depreciation and amortization) increased by 36.6% to Ps. 805.2 million in 2008, compared to Ps. 589.5 million in 2007. The increase was primarily the result of higher salaries and social security expenses, and an increase in paper and raw materials costs.

Selling and Administrative Expenses (Excluding Depreciation and Amortization)

Selling and administrative expenses (excluding depreciation and amortization) increased by 32.5% to Ps. 394.7 million in 2008, compared to the Ps. 297.9 million reported for 2007. The increase was primarily the result of an increase in advertising expenses, salaries, social security charges and in fees for services.

Depreciation and Amortization

Depreciation and amortization expenses increased by 59.0% to Ps. 60.6 million in 2008 compared to Ps. 38.1 million in 2007. The increase reflects capital expenditures made in recent years.

The results in this segment for 2008 reflect the 100% CIMECO consolidation.

BROADCASTING AND PROGRAMMING

Net Sales

Net sales increased by 32.3% to Ps. 1,037.6 million in 2008, compared to Ps. 784.4 million in 2007. The increase was primarily the result of higher advertising and sports programming sales, the increase in the pricing of cable signals -attributable to contract formulas that link pricing to increases in the monthly fees- and the effect of the new acquisitions. 

Cost of Sales (Excluding Depreciation and Amortization)

Cost of sales (excluding depreciation and amortization) increased by 36.7% to Ps. 689.5 million in 2008, compared to Ps. 504.2 million in 2007. The increase was primarily the result of higher programming and production costs, higher salaries and social security expenses, higher costs associated with the renegotiation of TV rights for soccer matches as well as with more soccer matches, and as the result of new acquisitions.

Selling and Administrative Expenses (Excluding Depreciation and Amortization)

Selling and administrative expenses (excluding depreciation and amortization) increased by 35.6% to Ps. 189.5 million in 2008, compared to Ps. 139.8 million in 2007. The increase was primarily the result of higher salaries and social security expenses, as well as the result of new acquisitions.

Depreciation and Amortization

Depreciation and amortization expenses increased by 22.9% to Ps. 23.7 million in 2008 compared to Ps. 19.3 million reported in 2007. 

DIGITAL CONTENT AND OTHERS

Net sales in this segment are derived from administrative and corporate services rendered by the Company and by our 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. Net sales to third parties are largely derived from advertising in our web pages and portals. Cost of sales (excluding depreciation and amortization) is driven mainly by salaries and professional fees paid to advisers. 

In this period, net sales increased 20.1% to 165.9 , and EBITDA resulted in 0.5 million in comparison with the 34.4 million reported for 2007, the decrease in EBITDA was mainly attributable to a reduction in the management fees that Grupo Clarín received from the Cable TV and Internet access segment and also to the increase in costs and salaries.

OPERATING STATISTICS BY BUSINESS SEGMENT

CABLE TV AND INTERNET ACCESS

(1) Figures in thousands

(2) Average Net Sales/ Average Pay TV Subscribers

(3) Argentina Only

PRINTING AND PUBLISHING

(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. Company estimates.

BROADCASTING AND PROGRAMMING

(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.

DIGITAL CONTENT AND OTHERS

In millions. Monthly average. Source IAB

DEBT AND LIQUIDITY

Negotiable obligations include Cablevisión USD 114.4 MM notes due October 2012; Cablevisión USD 235.1 MM notes due October 2015, Multicanal USD 105.7 MM notes due July 2013 and Multicanal USD 80.3 MM notes due July 2016, and AGEA Ps. 225.0 MM notes due 2011.

Total Financial Debt(1) and Net Debt, increased to Ps. 3,057.4 million from Ps. 3,018.4 million and to Ps. 2,589.8 million from Ps. 2,452.9 million, respectively, since 2007. This represents an increase of 1.3% in the Total Debt and of 5.6% in the Net Debt. 

Debt coverage ratio (1) as of December 31, 2008 was 1.5x in the case of Net Debt and of 1.8x in terms of Total Financial Debt. 

(1) Debt Coverage Ratio is defined as Total Financial Debt minus Cash and Equivalents divided by Adjusted EBITDA (last 12 months). 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. 

CONFERENCE CALL AND WEBCAST INFORMATION

Grupo Clarín will host a conference call and webcast to discuss its fourth quarter and full year results for 2008, on Wednesday, March 11, 2009. 

Presentations by: Alejandro Urricelqui, Chief Financial Officer; Alfredo Marin, Investor Relations Officer

Time: 12 pm Buenos Aires Time/2:00 pm London Time/10:00 am New York Time

To access the conference call, please dial: from within Argentina + 0 800 333 0050; from within the United Kingdom +44 (800) 092 3582; from within the United States +1 (800) 311 9401; and from all other countries +1 (334) 323 7224. The Conference ID is #6118.

To access the simultaneous webcast presentation, please direct your browser to: www.grupoclarin.com 

There will be a 60 day replay available starting one hour after the conclusion of the conference call. To access the replay, please dial +1 (877) 919-4059 toll free from the U.S., or +1 (334) 323-7226 from anywhere outside the U.S. The replay pass code is: 79953203. 

The PDF version of the webcast presentation will be available in at http://www.grupoclarin.com.ar/ir/ prior to the call, on March 11, and archived in our Website after its conclusion.

Enquiries:

In Buenos Aires:

Alfredo Marín, M. Julia Díaz Ardaya, Alejandro Yu

Grupo Clarín

Email: investors@grupoclarin.com

In London:

Alex Money, Lorna Ellen

Temple Bar Advisory

Tel: +44 20 7002 1080

Email: clarin@templebaradvisory.com

In New York:

Melanie Carpenter, Peter Majeski

I-advize Corporate Communications

Tel: +1 212 406 3692

Email: clarin@i-advize.com

ABOUT THE COMPANY

Grupo Clarín is the largest media company in Argentina and the market leader in the Cable Television and Internet Access, Printing and Publishing, and Broadcasting and Programming segments. Its Cable Television network is the largest in Latin America, with the largest broadband subscriber base in Argentina. Its flagship newspaper -Diario Clarín- is the highest circulation newspaper in Latin America and the second-highest circulation Spanish-language newspaper in the world. 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.

CONSOLIDATED BALANCE SHEETS

As of December 31, 2008 and 2007 

In Argentine Pesos (Ps.) 

  CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31, 2008 and 2007

In Argentine Pesos (Ps.)

(1) Chargeable to:

The Consolidated Statements of Operations for each business segment are included in the Financial Statements as of December 31, 2008, available at www.grupoclarin.com/ir 

CONSOLIDATED STATEMENTS OF CASH FLOWs

For the years ended December 31, 2008 and 2007

In Argentine Pesos (Ps.)

CONSOLIDATED STATEMENTS OF CASH FLOWs

For the years ended December 31, 2008 and 2007

In Argentine Pesos (Ps.) 

(1) Includes: