Shareholders,
During 2010 the performance of the principal markets of reference for the Mondadori Group were characterised by very limited growth in GDP and continuing high levels of unemployment; with regard to consumer spending there were weak signs of recovery in both Italy (+0.6%) and France (+1.4%).
In the sectors in which Mondadori operates: the consumer magazine market in Italy saw a continuation of the downward trends in circulation (-5.8% in terms of copies), advertising (-5.4%) and add-on sales (-23.6%). The Group’s performance in all three of these areas was better than the market, with advertising for Mondadori titles showing a slight fall (-1.9%) and add-on sales recording a much smaller decline than the market (-8.7%).
The results of Mondadori France - in a recovering magazine market, in terms of volume, in advertising and with a slight slowdown in circulation (-1.2% in terms of copies) – have validated the decision to simplify and concentrate the portfolio on high circulation titles and the success of the launch of Grazia, with levels clearly ahead of the market.
2010 also saw growth in book sales in Italy (+1.8% bookstore sales): the Mondadori Group confirmed its strong leadership, with a market share in trade books of 27.1%, despite comparison with the particularly strong editorial programme of the previous year. Sales of e-books began in October, with a catalogue that by the end of the year had reached 1,500 titles.
In other businesses: the R101 radio station saw an increase in advertising sales compared with the previous year, in line with a market where there were encouraging signs of recovery; the expansion of the direct and retail sectors continued, with a marked increase in revenues thanks to the franchising sector and the consolidation of Mondolibri from May 2010.
Mondadori’s efforts in the digital area were particularly intense in the closing months of 2010: there are a number of varied projects in this area based on the strength of the company’s content, brands and communities, all of which related to the Group’s publishing assets.
In terms of profitability, 2010 saw a marked improvement on the previous year: in addition to an increase in revenues, the period also saw the attainment of the objectives of the reorganisation plans, with reductions in the headcount and operating costs fixed for the year.
Gross operating profit, which grew by 32%, benefited from lower restructuring costs than in 2009 but was negatively affected, in the corresponding amount, by increased postal charges and, above all, by extraordinary impairment charges and the results of joint ventures operating in countries severely hit by recession.
The principal indicators for the year to 31 December 2010 were as follows:
Consolidated revenues came to €1,558.3 million, an increase of 1.2% on the €1,540.1 million of 2009.
Consolidated gross operating profit totalled €140.2 million, up 32% from the €106.2 million of the previous year.
As a proportion of revenues, this represented a rise from 6.9% in 2009 to 9%.
Consolidated operating profit came to €114.2 million, a jump of 59.1% compared with the €71.8 million of 2009, with amortizations and depreciations of intangible and tangible assets of €26 million (€34.4 million in 2009).
As a proportion of revenues, this represented a rise from 4.7% in 2009 to 7.3%.
Consolidated pre-tax profit came to €90.3 million, an increase of 41.3% on the €63.9 million of 2009, with higher financial charges of €16 million due largely to a capital gain in 2009 of €14.5 million following the closure of a private placement and related derivatives.
Consolidated net profit amounted to €42.1 million, a 22.7% increase on the €34.3 million of the previous year: the result was affected by the payment of €8.7 million in line with new norms regarding the definition of pending tax litigation.
Consolidated net profit for 2010, adjusted to take account of the aforementioned extraordinary item (tax charges for previous years) would amount to €50.8 million, more than double the €23.8 million net profit recorded in 2009, adjusted for capital gains.
With regard to the company’s assets, net assets as of 31 December 2010 amounted to €581 million, compared with €546.3 million at the end of 2009. Meanwhile, the Group’s net financial position went from -€372.9 million at the end of 2009 to -€342.4 million on 31.12.2010, an improvement of €30.5 million.
Performance in the individual sectors in which Mondadori operates is examined in more detail in the sections on the Group’s divisions. What follows is a brief outline of the highlights.