TV AZTECA ANNOUNCES NET SALES of Ps.2,909 MILLION and EBITDA of Ps.1,401 MILLION in 4Q08
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TV AZTECA ANNOUNCES NET SALES OF Ps.2,909 MILLION AND EBITDA OF Ps.1,401 MILLION IN 4Q08 —Quarterly Net Income Quadruples to Ps.863 Million— FOR IMMEDIATE RELEASE Mexico City, February 26, 2009—TV Azteca, S.A. de C.V. (BMV: TVAZTCA; Latibex: XTZA), one of the two largest producers of Spanish-language television programming in the world, announced today net sales of Ps.2,909 million, EBITDA of Ps.1,401 million and EBITDA margin of 48% for the fourth quarter of 2008. “We were able to preserve the solid top line level reported in the prior year and multiply net profit by four in the quarter, despite the difficult economic environment,” said Mario San Román, Chief Executive Officer of TV Azteca. “On the operating front, we further strengthened our successful programming grid, particularly in prime time, positively influencing sales in the period, and setting the basis for a firm market positioning in 2009.” Fourth Quarter Results Net sales were Ps.2,909 million, practically unchanged compared to Ps.2,898 million in the same quarter of 2007. Total costs and expenses were Ps.1,508 million, from Ps.1,381 million in the same period of the previous year. As a result, TV Azteca reported EBITDA of Ps.1,401 million, compared to Ps.1,517 million in the fourth quarter of 2007. The company registered net majority income of Ps.863 million, more than four times above the Ps.186 million in the same period of 2007. 4Q 2007 4Q 2008 Change Ps. % Net Sales $2,898 $2,909 $11 0% EBITDA $1,517 $1,401 $(115) -8% Net Majority Income $186 $863 $677 365% Net Income per CPO $0.06 $0.30 $0.24 365% Figures in millions of pesos. EBITDA: Operating Profit Before Depreciation and Amortization. The number of CPOs outstanding as of December 31,2008 was 2,916 million. Net Sales “The growing popularity of our content—especially novelas and La Academia: Ultima Generación—translated into a 41% commercial audience share in prime time in the quarter. Successful programming was key to build effective advertising campaigns for recognized brands in Mexico, and enhanced demand for multiple ad spaces in the period,” added Mr. San Román. Fourth quarter revenue includes sales of Ps.62 million from Proyecto 40, which have been consolidated in TV Azteca results beginning this year. TV Azteca also reported net sales from Azteca America—the company’s wholly owned broadcast television network focused on the U.S. Hispanic market—of Ps.194 million, compared to Ps.132 million a year ago. Programming sales to other countries were Ps.15 million in the period, compared to Ps.26 million the prior year. Revenue this quarter resulted from the sale of the shows Lo que Callamos las Mujeres and Montecristo in Latin America, and Bellezas Indomables in Europe. Revenue from barter sales was Ps.112 million, practically unchanged from Ps.113 million from the previous year. Costs and Expenses Total costs and expenses grew 9% in the quarter, as a result of a 13% increase in programming, production and transmission costs—to Ps.1,219 million, from Ps.1,079 million in the same period a year ago—and a 4% reduction in selling and administrative expenses—to Ps.288 million, compared to Ps.302 million in the same quarter of 2007. The increase in costs reflects the consolidation of Proyecto 40 in TV Azteca results, and the effect of the exchange rate depreciation on peso disbursements of the acquired programming that was transmitted during the quarter. 2 Decrease in selling and administrative expenses resulted from reductions in operating and travel expenses, and advisory fees, as a result of initiatives that punctually control the company’s outlays. TV Azteca continues to seek additional actions to reduce expenses, as a response to the deceleration of the economic activity in Mexico. EBITDA and Net Income EBITDA was Ps.1,401 million, compared with Ps.1,517 million in the same period of the prior year; EBITDA margin was 48%. Below EBITDA the main changes were: i) reduction of Ps.798 million in provision for taxes, due primarily to an extraordinary charge in the deferred income tax a year ago, ii) decrease of Ps.80 million in other financial expense, and iii) a Ps.60 million increase in interest paid, due to changes in the debt balance. Net majority income for the period was Ps.863 million, more than four times higher than Ps.186 million a year ago. Advertising Advances The balance of advertising advances as of December 31, 2008 was Ps.3,971 million, 8% above Ps.3,693 million in the prior year. The company considers that growth in advertising advances represents a vote of confidence of clients regarding the effectiveness of TV Azteca content to reach target markets. Debt As of December 31, 2008, TV Azteca’s outstanding debt—excluding Ps.1,621 million debt due 2069—was Ps.8,043 million. Such debt is peso denominated, and of it, Ps.6,000 million are long term Securities Certificates. The interest rate is fixed at 9.29% annually, thanks to interest coverage for the next three years. The cash balance was Ps.3,250 million, which resulted in net debt of Ps.4,793 million. Debt to last twelve months (LTM) EBITDA ratio was 2.1 times, and net debt to LTM EBITDA was 1.2 times. Twelve Months Results Net sales in 2008 were Ps.9,815 million, 3% above the Ps.9,505 million reported a year ago. Total costs and expenses were Ps.5,923 million, from Ps.5,482 million in the 3 same period in the prior year, primarily due to the consolidation of Proyecto 40 in TV Azteca results and the production and transmission of the Summer Olympic Games in Beijing. As a result, TV Azteca reported EBITDA of Ps.3,893 million in the year, compared to Ps.4,022 million in 2007. The company reported majority net income of Ps.1,054 million, from net income of Ps.1,041 million in the prior year. 2007 2008 Change Ps. % Net Sales $9,505 $9,815 $311 3% EBITDA $4,022 $3,893 $(130) -3% Net Majority Income $1,041 $1,054 $13 1% Net Income per CPO $0.36 $0.36 $0.0 1% Figures in millions of pesos. EBITDA: Operating Profit Before Depreciation and Amortization. The number of CPOs outstanding as of December 31,2008 was 2,916 million. Company Profile TV Azteca is one of the two largest producers of Spanish-language television programming in the world, operating two national television networks in Mexico, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca affiliates include Azteca America Network, a new broadcast television network focused on the rapidly growing U.S. Hispanic market, and Azteca Web, an Internet company for North American Spanish speakers. TV Azteca is a Grupo Salinas company (www.gruposalinas.com), a group of dynamic, fast growing, and technologically advanced companies focused on creating shareholder value, and improving society through excellence. Created by Mexican entrepreneur Ricardo B. Salinas, Grupo Salinas operates as a management development and decision forum for the top leaders of member companies. Except for historical information, the matters discussed in this press release are forward-looking statements and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Other risks that may affect TV Azteca and its subsidiaries are identified in documents sent to securities authorities. Investor Relations: Bruno Rangel Dinorah Macías + 52 (55) 1720 9167 + 52 (55) 1720 0041 [email protected] [email protected] Press Relations: Tristan Canales Daniel McCosh + 52 (55) 1720 1441 + 52 (55) 1720 0059 [email protected] [email protected] (Financial tables follow) 4 TV AZTECA, S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED RESULTS OF OPERATIONS (Millions of Mexican pesos of December 31 2007, and 2008 ) Fourth Quarter of : 2007 2008 Change Net revenue Ps 2,898 100% Ps 2,909 100% Ps 11 0% Programming, production and transmission costs 1,079 37% 1,219 42% 140 13% Selling and administrative expenses 302 10% 288 10% (13) -4% Total costs and expenses 1,381 48% 1,508 52% 127 9% EBITDA 1,517 52% 1,401 48% (115) -8% Depreciation and amortization 126 129 4 Operating profit 1,391 48% 1,272 44% (119) -9% Other expense -Net (301) (308) (6) Comprehensive financing result: Interest expense (200) (261) (60) Other financing expense (97) (17) 80 Interest income 31 23 (8) Exchange gain -Net 3 39 36 Gain on monetary position 44 - (44) (220) (216) 4 Income before the following provision 870 30% 749 26% (121) -14% Provision for income tax (684) 114 798 Net income Ps 187 Ps 863 Ps 676 Net income of minority stockholders Ps 1 Ps - Ps (1) Net income of majority stockholders Ps 186 6% Ps 863 30% Ps 677 365% 5 TV AZTECA, S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED RESULTS OF OPERATIONS (Millions of Mexican pesos of December 31 2007, and 2008 ) Year ended December 31, 2007 2008 Change Net revenue Ps 9,505 100% Ps 9,815 100% Ps 311 3% Programming, production and transmission costs 4,323 45% 4,767 49% 444 10% Selling and administrative expenses 1,159 12% 1,156 12% (3) 0% Total costs and expenses 5,482 58% 5,923 60% 440 8% EBITDA 4,022 42% 3,893 40% (130) -3% Depreciation and amortization 434 479 45 Operating profit 3,588 38% 3,414 35% (175) -5% Other expense -Net (744) (867) (122) Comprehensive financing result: Interest expense (799) (868) (70) Other financing expense (162) (119) 42 Interest income 110 93 (17) Exchange (loss) gain -Net (10) 79 89 Gain on monetary position 70 - (70) (790) (816) (26) Income before the following provision 2,053 22% 1,731 18% (323) -16% Provision for income tax (1,013) (676) 336 Net income Ps 1,041 Ps 1,055 Ps 14 Net income of minority stockholders Ps (1) Ps 1 Ps 1 Net income of majority stockholders Ps 1,041 11% Ps 1,054 11% Ps 13 1% 6 TV AZTECA, S.A.