Lagardère Publishing Presentation
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PRESENTATION INVESTOR DAY LAGARDERE Paris - 28 May 2014 INVESTOR DAY – PRESENTATION AGENDA . Hachette Livre since 2010 – Hachette Livre today – 2003-2013 highlights . Hachette Livre’s successful digital transformation – Market environment: a new deal – Actions put in place and results today – Opportunities . Three year outlook – Pursue digital transformation – Consolidate market position – Invest in emerging markets . Conclusion 2 INVESTOR DAY – PRESENTATION HACHETTE LIVRE IS THE WORLD’S #3 CONSUMER BOOK PUBLISHER, A LEADER IN CORE MARKETS Top 3 Consumer book publishers Ranking in core markets worldwide Based on 2013 pro-forma turnover (€m) Based on 2013 market data and results (Consumer: Trade & Education including Higher Education) Worldwide #3 5,085 #1 3,259 2,066 #2 #3 * ** #4 Penguin Random House #2 *Pearson excludes Penguin revenues **Internal estimate including 100% of Penguin revenues Based on 2013 average exchange rates. Revenues from STM, professional markets and other activities than book publishing have been excluded when it could be isolated Sources: annual reports, internal estimates, Ipsos, Nielsen Bookscan 3 INVESTOR DAY – PRESENTATION IN FRANCE, ITS HOME TURF, HACHETTE LIVRE IS THE #1 PUBLISHING PLAYER SPLIT OF 2013 SALES BY BUSINESS France** CONTRIBUTION TO 2013 GLOBAL SALES* 37% Distribution 25% (€ 2,066m) 50% 25% Trade Education Focus on France 3 BUSINESSES TRADE EDUCATION DISTRIBUTION IN FRANCE 2013 ranking 20.5% 45% 33%*** and market # 1 # 1 # 1 share in value • Fiction & Non Fiction • Primary Main segments of presence and • Illustrated & Children • Secondary • Owned imprints examples of • Third-party clients (40%) imprints • Reference • Academic & Professional • High level of production • 75% backlist • From “boutique” to mass market • Dependant on curriculum change Key business • Exceptional brands • Working capital negative (none in 2013/2015) • Outstanding performances in 2013 • Extremely resilient factors • High margins associated with high (Fiction bestsellers, new album of market shares Asterix, Violetta) *Sales by country of origin ** Including other French-speaking countries ***Distribution in Trade (internal estimates for print market) Sources: Ipsos (physical sales only), Education group of Syndicat National de l’Edition, internal estimates 4 INVESTOR DAY – PRESENTATION HACHETTE BOOK GROUP IS THE #4 PLAYER IN THE US TRADE MARKET SPLIT OF 2013 SALES BY BUSINESS USA 4% CONTRIBUTION TO 2013 GLOBAL SALES* Distribution 23% (€ 2,066m) Trade 96% 2 BUSINESSES TRADE DISTRIBUTION 2013 ranking and 5.8%** ~8% market share in volume # 4 Main segments of • Owned imprints presence and examples of imprints • Third-party clients: ~40% of the activity • Brilliant Frontlist Publisher, # 1 in the market, experiencing good performance in 2013 • 206 print and 84 ebook NYT bestsellers • Working capital negative (52 titles in #1 positions) • Achieved digital transformation Key business factors • All authors have agents • Aggressive growth strategy in • Stronger in Adult Fiction than in other segments 3rd-party business • Acquisition of Hyperion in 2013 to reinforce the Non Fiction list *Sales by country of origin **Including sales of some distribution clients. Post-acquisition sales for Hyperion included. Physical sales only Sources: Nielsen Bookscan, internal estimates 5 INVESTOR DAY – PRESENTATION HACHETTE UK IS A LEADING PLAYER IN THE UK AND COMMONWEALTH COUNTRIES SPLIT OF 2013 SALES BY BUSINESS UK 8% 5% Distribution CONTRIBUTION TO 2013 GLOBAL SALES* Education (€ 2,066m) 21% Including Ireland, India and Australia 87% Trade Focus on the UK 3 BUSINESSES TRADE EDUCATION DISTRIBUTION IN THE UK 2013 ranking 12.8% ~23-24% and market # 2 # 4 # 1 share in value • Fiction & Non Fiction Main segments of presence and examples of • Secondary Schools Market: • Owned imprints • Illustrated imprints # 3 on this segment • Third-party clients: 41% of activity • Children • Need for size • All authors have agents • Extremely concentrated • Most unregulated market • Working capital negative Key business • More digital than France but • High retail concentration • Less profitable than France and only ~10% factors • Outstanding performances in 2013: US • Strong performance in 2013 112 Times bestsellers (curriculum change in Scotland) *Sales by country of origin Sources: Nielsen Bookscan (physical sales only); Education group of Publisher’s Association; The Publishers Association; internal estimates 6 INVESTOR DAY – PRESENTATION HACHETTE LIVRE ESPAÑA IS A LEADING PLAYER IN SPAIN AND LATIN AMERICA SPLIT OF 2013 SALES BY BUSINESS Spain & Latin America 4% Distribution CONTRIBUTION TO 2013 GLOBAL SALES* Trade 26% (€ 2,066m) 70% 8% Education EDUCATION TRADE DISTRIBUTION 4 BUSINESSES LATIN AMERICA (SPAIN) (SPAIN) (SPAIN) 2013 ranking 20.3% • Mexico and market # 1 # 4 -- • Argentina share • # 2 in Adult Non Fiction • Educational books Main segments (market share of 7.1%) of presence • # 5 in Adult Fiction (market and examples • Mainly for owned share of 2.4%) of imprints imprints • # 4 in Juvenile segment (8.5%) • Reference • Several languages and • Very concentrated Key business curricula • Hurt by very difficult • Not an established factors • Heavily funded by public environment business in Spain • Reform in 2014 • Opportunities to come ? *Sales by country of origin Sources: Internal estimates for education. Nielsen Bookscan for Trade market shares (print sales, in volume) 7 INVESTOR DAY – PRESENTATION HACHETTE LIVRE OPERATES A PARTWORKS BUSINESS WITH A STRONG PRESENCE WORLDWIDE Partworks CONTRIBUTION TO 2013 GLOBAL SALES* (€ 2,066m) 11% Editorial do Brazil Germany United Kingdom Ireland Russia Canada Netherlands Belgium Switzerland Austria Japan France Hungary Spain Mexico Greece Portugal Taiwan Romania Italy Presence of Bulgaria AT A GLANCE Malta Hachette Livre Slovakia Poland 33 Countries * Czech Republic 16 Languages Peru Brazil Ukraine 157 Employees Belorussia Australia 69 Launches in 2013 Chile 177 Active collections South Africa around the world Argentina New Zealand *Sales by country of origin 8 INVESTOR DAY – PRESENTATION HACHETTE COLLECTIONS IS THE #2 GLOBAL PLAYER IN PARTWORKS BUSINESS OVERVIEW 23%* 2013 ranking and market # 2 share in value - Partworks activity has been extending its international network year after year: compared to 2009, new countries became the main contributors of sales in 2013 ** 2009 61% of sales & 57% of EBIT Key business factors 2013 51% of sales & 69% of EBIT - Successes on all markets excluding Spain in 2013 - High R&D, marketing and promotional expenses - Need for very professional testing processes - Need for tight operational management * Internal estimates based on sales in newsstands ** Spain, Portugal, and Latin America excluding Brazil 9 INVESTOR DAY – PRESENTATION HACHETTE LIVRE EXTENDED ITS REACH THROUGH BUSINESSES IN DEVELOPING COUNTRIES * * * • Participation in Azbooka- • Launched in 2008 Atticus Publishing Group • English language • Joint venture with Librairie since 2011 consumer book subsidiary • Joint venture with Phoenix Antoine established at the • 407 people Overview Publishing Media Group end of 2009 • 17 people • 21 people in the in the # 2 Trade market # 3 Trade market • Trade: local and international • Marketing and distributing Fiction & Non Fiction, • Local and international books for HUK and HBG • International Fiction, Non Children, Practical, Fiction, Children, Non Fiction • Fiction, Children’s and Segments Fiction / Practical, Children Reference / Practical Reference books as well • Education as Non Fiction • 1,229 new titles in 2013 • 91 titles in 2013 • 227 titles in 2013 • Growth of 2013 sales: +10% • Fiction: D. Kennedy, J-C • Growth of 2013 sales: +10% • Fiction: development of Grangé, D. Baldacci, • Fiction: Arab classics as well foreign authors (JK Rowling, acquisition of G. Musso as very contemporary Jojo Moyes, Jo Nesbø), • Non Fiction: I Am Malala, bestsellers (both Arab like strong line of classics • ~35 adult books and David Beckham illustrated Ahlam Mosteghanemi, and • Children: strong authors 15 children’s books Key trends biography, self-help, soft Western like J.K. Rowling, (Enid Blyton, Astrid published per year business, biographies Harlan Coben) Lindgren), new Harry Potter • Strong Children line, with • Disney license, Mr. Men & edition for 2014 « Disney Learning » license Little Miss license • Development in new and other Edutainment titles, • Practical titles (Méthode segments such as business and Children Fiction Dukan, cook books) books, coffee-table books *Not consolidated 10 INVESTOR DAY – PRESENTATION HACHETTE LIVRE PUBLISHED 16,452 NEW TITLES IN 2013 Examples of 2013 bestsellers Trade Education and Partworks References Literature Illustrated Children Germany Italy France Brazil Japan Russia Russia France 11 INVESTOR DAY – PRESENTATION AGENDA . Hachette Livre since 2010 – Hachette Livre today – 2003-2013 highlights . Hachette Livre’s successful digital transformation – Market environment: a new deal – Actions put in place and results today – Opportunities . Three year outlook – Pursue digital transformation – Consolidate market position – Invest in emerging markets . Conclusion 12 INVESTOR DAY – PRESENTATION THE GROWTH OF THE GROUP WAS FUELLED BY ACQUISITIONS AND INTERNATIONAL DEVELOPMENT 20032004 2005 200620072008 2009 2010 2011 2012 2013 2014 France UK Spain USA Latin America Argentina Mexico China (JV) Others (JV) India Lebanon Russia (25%) 13 INVESTOR DAY – PRESENTATION HACHETTE LIVRE HAS POSTED STRONG GROWTH OVER THE PAST TEN YEARS Hachette