Prosieben Sat 1 Media

Welcome to our Q2 H1 2022 results conference call of ProSieben Satines Media SE. This conference is being recorded. Today's call is hosted by Mr. Dirk Voigtlander. Please go ahead.

Thank you, operator, and good afternoon, ladies and gentlemen, and welcome to our second quarter 2022 results conference call. As in previous quarters, today's conference call will be hosted by Rainer Bourgeon, CEO of Prozim Z1, and Ralf Gehrig, CFO of the group. During the presentation, Rainer and Ralf will take you through the financial and operational performance of the second quarter and the first six months of 2022. Rainer will finish the presentation with comments about the updated financial targets for the current financial year. The presentation will be followed by a Q&A session. With these opening remarks, I now hand over to Rainer.

Good afternoon also from my side and welcome to our analyst and investor call. Today we want to share with you the results of our second quarter of 2022 and the first half of the year. We were right on track with our development in the second quarter and made progress in implementing our strategy. We continue to see the diversification of our business to pay off and that the combination of content, reach and monetization Thus, the basis of our business model works. Let's start with a look at this quarter's highlights. In the second quarter, we were able to sustain our growth momentum despite the macroeconomic challenges caused by the war, e.g. supply shortages and a tight energy market, inflation and decreasing consumer confidence. Let me give you a quick overview. First, We continue to grow our revenues even after the strong growth in the previous year period. Our revenues slightly increased by 1% to 1 billion 55 million euros in the second quarter 2022. Our adjusted EBITDA has remained stable. This proves once again that thanks to our diversified profile, we are more crisis-proof than many other media companies. Second, the revenue growth was driven by two segments. The entertainment segment grew by 2%, with our advertising business remaining about stable despite the macroeconomic challenges. In our commerce and ventures portfolio, revenues increased by even plus 10% organically. Here, assets that were affected by the pandemic restrictions in the previous year such as our experience provider Jochen Schweitzer MyDays and the car rental comparison portal BilligerMietwagen.de, saw a clear recovery. Also, our digital investment business at Seven Ventures and Seven Growth continued to increase revenues. Third, we saw clear growth in our adjusted operating free cash flow. One of our most important KPIs grew by 26% to 109 million euros. we also furthered the leveraging with our clear and strong cash flow management. Accordingly, our leverage ratio decreased to 2.3 times compared to the end of previous year's second quarter. Of course, we also continued to execute our active portfolio management and thus further optimized our company setup. On July 1st, we sold our OS production business which was part of Red Arrow Studios. This reflects the clear focus of our TV activities in the German-speaking region, for which we are producing local, relevant content that is distributed live and on demand across all platforms. Fifth and finally, mainly due to this portfolio change, we are updating our full year guidance, which I will explain in detail at the end of this presentation. Of course, we also hear the estimates of RTL on the development of the advertising market. Here, you have to take into account that the print market now also is part of RTL's business model through the Gruner & Jahr acquisition and that its development is more effective than the one of the TV and digital advertising market. That is why we believe in a significantly better development of our business which was already the case in the first six months and which we are also seeing moving forward as we are completely focused on becoming a digital company. Together with our group CFO Ralf Gierig, I will give you a deep dive in all these topics in the next minutes. Let's start on slide number four. After a good start into the year, we continue to capitalize on our diversified portfolio. After previous year's Q2 revenues had significantly benefited from catch-up effects due to the COVID-19 pandemic, we have been able to consolidate the strong previous year performance, despite the challenging economic environment caused by the Russia-Ukraine war. If you look at our revenue split, you realize how robust our setup is. Our entertainment advertising business in the German-speaking region only accounts for 44% of revenues in the second quarter. Furthermore, our commerce and ventures, as well as our dating and video segments, are positioned in structural growth markets that have increased their potential substantially in the past years. This shows how well our revenue diversification enables us to balance out fluctuations within our group portfolio. We are therefore very satisfied with our Q2 result, as it underlines the strength of our group strategy once again. This directly leads us to slide number 5. As discussed in our full year presentation, the interplay of reach and monetization enables strong shareholder returns at ProSiebenSat.1. This is also underlined by our recent increase in dividend payments. Our reach is the basis for our monetization and the foundation of our growth ambitions. At the same time, all our three segments are linked with one shared vision. We empower brands and create moments that matter. Driven by this vision, we further executed on our strategy in the past quarter. With regard to further expanding our reach, we increased our audience shares by 0.6 percentage points and maintained our high market share. With this, we continued to be the leading entertainment platform in the German-speaking region. And we just started the third quarter with another highlight. We successfully kicked off the first German Soccer League in that 1st past Friday. To strengthen this top position, we put local relevance and exclusive content in the spotlight. We underlined the strategic focus by selling our US production business of Red Arrow Studios. I will share more details on this in a moment. Furthermore, we increased our marketable AVOD video views on our streaming platform JOIN by 23% in the first six months of the year. To remind you, With JOIN, we are uniquely positioned in the streaming market because of its strong advertising finance offering focusing on free and local content. Also, our channels are now available on all major distribution platforms. By offering our best-in-class entertainment anywhere and anytime in a platform-independent approach, we further maximize our free TV and addressable TV reach as well as extend video-on-demand business. We also made progress in diversifying our monetization. We confirmed our position as number one in the German TV advertising market. In Q2, ProSieben.1 achieved a market share of 38%. This translates to an increase of 1.6 percentage points compared to the previous year. In our commerce and venture segment, we secured new media for equity deals. Here, we offer growth companies advertising time combined with the high reach and strong impact of the medium TV in order to increase their brand awareness and ultimately enterprise value. In return, we participate in the company's success by shares in the company itself. One of the latest examples is Germany's new unicorn, the consumer tech subscription platform Grover. And of course, we continuously monitor our investments to see whether they still contribute to our long-term strategy, whether to find new opportunities and investments for our portfolio, or whether to exit and monetize. Thanks to the strategy, we were able to let our shareholders participate with strong dividends and our success. After our annual general shareholder meeting in May, we paid out a dividend of 80 cents per share, a year-on-year increase of 63%. This corresponds to a total dividend payout of 181 million euros and thus 70 million euros more than in the previous year. Now, let's have a closer look at the milestones we achieved in the past month. The disposal of our US production business was clearly one of them. On July 1st, we sold all of our US production companies to the North Road Company. The transaction is based on an enterprise value of 293 million euros. The purchase price is subject to customary adjustments and is around 189 million euros. US production companies which have been sold generated revenues of 135 million euros and adjusted EBITDA of 3 million euros as well as an adjusted operating free cash flow of 2 million euros. Adjusted net income was at minus 3 million euros in the first half of 2022. I will explain later in detail the effect of this disposal on our full year guidance Please note that the performance of the Disposed Content Production business will to be back loaded this year due to the timing of projects that had already been commissioned last year. Therefore, we expect higher revenues in the second half of 2022 compared to the first half of the year as shown on this slide. In general, the sale of our OS production business clearly proves our strategic priorities. We are one of the largest entertainment players in Germany. Producing our content locally and distributing it across all platforms is our key competence. We are thus putting the German-speaking region and the production of local and relevant content at the core of our business. We need production companies that understand the cultural characteristics and preferences of our viewers. After all, local content is what sets us apart from the competition. Such production businesses are, besides our German companies, our assets in countries such as Denmark and the UK. It is therefore logical that we keep these companies within our group. In addition, we recently launched two new production companies in Germany. Shireo Entertainment is working on shows and entertainment Plaid White production creates factual formats both for the German market. Our top priority now is to link the companies of our production portfolio even more closely with our entertainment platforms. This is what our active portfolio management is all about. We continuously verify that our companies are fully aligned with our strategy and financial targets. Red Arrow Studios is now fully in line with our focus on the German-speaking market, and all divestments have successfully been accomplished. After the disposal of the U.S.-based distribution business of Gravitas Ventures in the previous year and the U.S. production business now, our production business concentrates on the European and German-speaking market. This transaction marks an important milestone in the streamlining of our business areas within the entertainment segment. The strategy strengthened our most important financial KPIs going forward, in particular our ProSiebenSat1 return on capital employed and reduces our debt as well as we raise money indirectly through disposals in addition to significantly improved adjusted operating free cash flow. With this, I hand over to our group CFO, Ralf Gierig, who will guide you through our group financials for the second quarter and the first half of 2022.