Lagardere Sa

Ladies and gentlemen, thank you for joining us this evening to Lagarde RSA and the Louis Hachette Group's 2024 results. I'm Emmanuel Rapa, Head of Financial Communication, and I will be guiding you through this presentation. Tonight, the conference follows a new format. We will go through Lagarde RSA first in terms of results, and then go with Louis Hachette Group results, Thus, the call will be led by Arnaud Lagardère, Chairman and CEO of Lagardère SA and Hachette Livre SA, Jean-Christophe Thierry, CEO of Louis Hachette Group, and Grégoire Castin, Deputy CEO of Lagardère Group in charge of finance and Deputy CEO of Louis Hachette Group. Dag Rasmussen, Chairman and CEO of Lagardère Travel Retail, Claire Leost, CEO of Prisma, are also here with us. After the presentation, I will be reading the questions from financial analysts only. And now I leave the floor to Arnaud Lagardère.

Thank you so much, Emmanuel, and good evening to all of you. It seems that we have a big crowd today, more than 100 people listening, so it's good. We take it as a huge compliment, obviously. So as far as Lagardère is concerned, we broke, I think, a record for the past 15 years, both in sales and in results. And this is clearly the result, the consequence of the strategy that we've put in place a little more than 15 years ago, by the way, by reducing the number of businesses and focusing more on few activities with the ambition to put them on the podium. Not only they are today on the podium regarding Hachette Book Group and Lagardère Travel Retail, but also they have a strong, solid sales and raise up, obviously. So I would like to take the opportunity to really thank and congratulate 30,000 almost colleagues of Lagardère for the tremendous job that they have done. As you know, strategy is one thing, but the execution is sometimes way more difficult. To reach that goal, we had to invest over the years quite a significant amount of cash, APEX, OPEX, and acquisitions also. And the result of that is obviously the debt. Now we're opening a new page of the company with Vivendi coming on board and the fiscal year of 2024 actually is the first year of Vivendi, now more Groupe Bolloré on board of Lagardère. So the focus is pretty much the same and the benefit of having Vivendi is quite significant. First of all, we have a more peaceful environment with our shareholders. That was not a hard thing to do, by the way. Second, we have some business synergies that we've started to implement with Groupe Canal. We might have some and will have some with Prisma. Maybe my colleague, Claire, will talk about that later on. And also with Avas to a certain extent. The also benefit we have is the cash focus that is becoming a priority for us. As you know, during the year 2024, and we'll continue to do that in 2025, we try not to spend too much cash in the operations, not milking the company, obviously, but taking care of reducing the debt. And you will see, Gregor will tell you that we are really, really on track. And regarding the benefits, last but not least, we did our own Mercato, as we used to say in the football field, and we had the opportunity to bring on board to Lagardère a couple of great, great people, starting with Jean-Christophe Thiry, who is here, with Grégoire Castin, but also people that are not here, maybe listening to us, like Maxime Saada and Michel Sibonyi. So to conclude, I would like to say that we are not ready to move forward with a lot of confidence for this coming year since we have two very strong businesses and we are ready to take any opportunities to grow. Taking care at the same time, as I said before, and I would like to emphasize this and repeat it again and again, being very, very cautious about the cash that we will invest in all our divisions. Now, I'm glad to leave the floor to my friend Grégoire and ready to get back to you for the Q&A session.

Thank you. Thank you very much, Arnaud, and good evening to everyone. I'm really pleased to share with you for the second time at Lagardère Level and for the first time at Louis Hachette Group Level strong and remarkable results. We will go as Emmanuel mentioned it through the Lagardère result and then shared the figures at the Louis Hachette Group level. So starting with the Lagardère figures, as you can see, at the end of year 24, Lagardère Group's revenue reached its highest historical level at nearly 9 billion euros and is up 11% as reported and 8.5% on the Like for Life basis. The group's recurring EBIT continued to break records at 593 million euros, up by 73 million versus last year. The adjusted EBIT or EBITDA was up 23% as just below 500 million euros. And the free cash flow also improved significantly at 523 million, increasing by 162 million compared to 23. As a result of this very high level of free cash flow, the net debt decreased by 188 million euros, enabling us to have a strong deleveraging to a ratio of 2.4 compared to 3 at the same period last year. Let's have a closer look to the revenues evolution. And as you can see, on this slide. Again, the growth in terms of revenue is 10.6% as reported and 8.5% on a like-for-like basis. The main difference comes from the scope effect. The scope effect was a net positive of €452 million, which mainly includes the impacts of the acquisition of Costa Coffee Marché in Germany and Test on the Fly in the US at Travel Retail in 2003, and the sale of Paris Match in 2004. If we now focus on the like-for-like growth, it's important to point out that all activities showed positive growth this year. La Garda Publishing revenues grew by 1.9% on a like-for-like basis. La Garda Travel Retail reached a new peak in terms of revenues, increasing by 12.5% on a like-for-like basis, and other activities were up 0.2% on a like-for-like basis, and 1.3% on actual figures, by the way. Moving on to profitability, as I already mentioned it, our recurring EBIT raise up in France rose significantly by 73 million, and reached an historical level at 5%. We are really happy to see that this high level of recurring EBIT is almost equally supported by the two main activities, €310 million for the publishing, €305 million for the travel retail. It's good to see that there is henceforth a challenge for the leading position within the group. So let's have a look now to the cash flow on slide seven. As I told you in July, the group's free cash flow generation was one of the key priorities for the group this year. And as you can see, our effort drove to a high level of $423 million in 2014. This strong increase is mainly linked to publishing with 177 improvements year on year, mainly thanks to the quite low 24 basis, 23 basis, sorry. 23 was actually impacted by a negative change in working cap and by a high level of capacity to the logistic and IT transformation project. With $274 million free cash flow generated in 2024, publishing came back to a very good level of rapid conversion into cash flow. Travel retail generated $188 million in line with strong operational performances. The net small decrease of $37 million was due to a very good level of working cap in 2023, mainly linked to the post-COVID effect. Regarding this variation of working cap, to make a long story short, the very high level of recovery in 2024 had a strong impact on stock. Even if the growth is still very strong in 2024, the impact on stock is much lower in 2024 than in 2023. Regarding the capex, our capex increased by 3%. 56 million at Lagardère Travel Retail in 2024 compared to 2023 and amount this year to 250 million euros. So if we focus on cash generation, we don't want to milk the business as Arnaud mentioned it and we want to fuel the future growth of these activities and that's why we invest a lot in 2024. On the next slide, regarding cash and notably the performance of TrueAvailableTrader, I think it's even better to focus on the free cash flow after M&A impacts. It's how cash flow, operating cash flow, less tax paid and less M&A effects. And as you can see, in 23, community cash outflow was minus 74 million euros, with a positive contribution only at publishing level. This year, in 2024, all our three activities generated a positive cash flow after investing for a community impact of 518 million euros. So again, a very strong performance. On the next slide, in a nutshell, thanks to these good operational performances and to a strong discipline on M&A, the net debt decreased by 188 million compared to 23. Beside the operational cash flow, the sale of Paris Match was definitely a material cash inflow, partially affected by the acquisition of Sterling Union Square by Lagardère Publishing and by the passage of a participation in X-Time Travel Essential, our JV with Aéroport de Paris. Then last year, we paid dividends for a total amount of 154 million, and we paid also 176 million of interest and other charges. This very high level of interest is, of course, the main motivation for us for leveraging the group. So as a conclusion, thanks to this strong discipline of all the teams, We are really happy to achieve our target with a leverage below 2.5 times and even 2.4 times at the end of this year compared to last year as of December. Let's move on to the details of our main VU starting with Lagardère Publishing. As already mentioned, like other publishing, revenue was up nearly 2% on the Like for Like babies this year, at nearly 4 billion euros, mainly supported by our international activities. International revenues, as you can see now, represent more than two-thirds of publishing revenues, and our activities are very well balanced between the US, UK, and France. In the US, the revenue was up 7%, And in the UK, after a very good 23 years, they were also up 3%. In France, after a very solid 23 years, the revenues were slightly declining, reflecting a softer performance from general literature segment due to a lighter release schedule, and from illustrated books with the lack of a new asterisk release this year. Sales in education were also slightly down to the lack of curriculum reform in France and in Spain. More generally, on the next slide, we can also highlight our well-balanced and diversified activities. As you know, the group is well-balanced between geographies. Publishing also benefits from a well-diversified portfolio of activities. The development is quite stable compared to last year. And we can point out that the general literature is still our biggest branch, with sales that was notably boost in 24 by our digital offer. By digital, I mean audiobook and e-book, for which we are witnessing a strong growth, as you can see. The momentum is particularly strong in the US and the UK. For instance, Hachette has been the biggest player since 2020 in the UK. And in 2024, both audiobook and e-book represent 14% of total publishing revenues, up from 12% in 2023. I won't give the figures country by country, but there is definitely a big gap regarding digital revenue between France on one side and UK and US on the other side. I would tend to think that this is definitely one of the growth potential for the France. And to finish on this slide, let me highlight, for instance, the impressive growth of board games, which is still a small part of our activities. It's not our core business, but we are now the second player in the French market. And it's also a good way, and not the only one, to find growth relay and increase margin. So we are now the second player, as I mentioned, we are really profitable and we had an increase by more than 20% for a year in terms of revenues. Leading us to the next slide regarding profitability for the publishing, Lagardère publishing profitability reached 310 million euros. a 9 million increase compared to 23, maintaining profitability at a very high level with almost 11% of EBIT margin. We achieved the city results thanks to a several mix of sales in the US and the UK, particularly regarding the digital, which could be relative for our margin, and with a strong backlist and cost-saving measures in France. Let's move on to Lagardère Travel Retail. 24 was another remarkable year for Lagardère Travel Retail at 5.8 billion euros of revenue with solid performance across all our geographies. The MES zone recorded 20% growth driven by continued traffic recovery. In France, Lagardère Travel Retail maintained its leading position with sales improvement by 15% versus last year. U.S. activities was also up 6% on an already high basis of comparison and in the context of stabilization or small growth of air traffic. And Asia-Pacific revenues declined by 13% due to, as you know, lower activity in China. Despite this situation in China affecting many players and many more than us, Overall growth of the branch remains very positive with, again, 12.5% on a like-for-like basis. Let's deep dive into the division revenue for Lagardère Travel Retail. As you know, Lagardère covers all the segments of travel retail with travel essentials, duty-free and fashion, and dining. With this model, we develop holistic shopping experiences for passengers. In 24, business line mixed moved slightly with continuous growth in dining, winning two points, mainly driven by the full impact of Test of the Fly acquisition in November 23. Moving on, the profitability of La Garda Travel Retail. As already mentioned, we are really pleased to share this recurring EBIT, which was at a high. an all-time high level with up 25% compared to last year and 305 million euros. Our profitability reached 5.3% plus 0.4% versus last year. Travel and Trail reached these strong performances thanks to improvement of air traffic, focus on organic growth, Again, strong cost of control. And last but not least, successful integration of our latest acquisition. Let's move on to the other activities. As you know, this BU combines media and entertainment businesses. Revenue for this year increased to 257 million euros. A few points to be highlighted. First, the good momentum in radio activity driven by the audience growth at Europe 1. The second one is the press activity, which was down 5% due to lower advertising revenue, but all licenses were again up 2% compared to 23%. And finally, Lagardère Live Entertainment recorded a growth thanks to the successful programming of our live entertainment, The News. Few words on the ESG strategy. In 2004, it was, again, another year of progress. On this slide, you can see some of our achievements and our efforts to limit the impact on environment, to place people at the heart of our strategy, to enhance our ethical responsibility, and to inclusively share cultural activities. Let me only point out three items. Maybe the first one, at Lagardère Publishing, as you can see, we want to reduce by 25% plastic use by 2023. At Lagardère Travel Retail, we target to offer 75% of recycled water bottles in our shops by the end of this year. And regarding the audiobooks, as you can see, today we have 20,000 audiobooks which are available from our backlist, which is good for sharing culture with as many people as we can and also good for boosting our digital business. This is, I think, good. Example on ESG stakes, which is aligned with business and operational stakes. If I move to the coming year, 2025, regarding 2025 in April, the Board of Directors will propose to the AGM a dividend payment of 67 euro cents per share for 24, which is an increase of roughly 3% compared to last year. And for the next year, we are again confident on our ability to continue on the growth path and intend to maintain our efforts to ensure a well-balanced capital allocation policy between investments to develop the business, reasonable dividend level and debt I now hand over to Jean-Christophe for turning to Louis Hachette Group, and then I will come back for the figures.