Vivendi Q3 Sales Up, Income Down, UMG Off 7%

Universal Music Group

VIVENDI's Q3 results were announced today, with group sales up 4.5% to 2.5 billion euros, while income from operations lagged behind at 20.4% at 257 million euros. Adjusted net income was down 8.8% at 172 million euros. Nine-month revenue was up 7% to 7.6 billion euros, while EBITA was down 3.8% to 735 million euros.

Analysts at CITI RESEARCH had expected Q3 sales of 2.56 billion euros, earnings before interest, tax, depreciation and amortization (EBITDA) of 390 million euros and adjusted net income of 199 million euros.  The nine-month figures were more in line with expert estimates.

UNIVERSAL MUSIC GROUP saw a slight decline in sales, while CANAL PLUS continued to struggle with lower subscriber growth, weak ratings at some of its key shows and growing competition from online rivals like NETFLIX.

UMG revenues were 3,492 million euros, up 2.1% at constant currency and perimeter (+12.8% on an actual basis) compared to the first nine months of 2014, driven by growth across all divisions.

Recorded music revenues grew 1.9% at constant currency and perimeter thanks to growth in subscription and streaming revenues (+33%) and the recognition of legal settlement income, which more than offset the decline in both digital download and physical sales.

Music publishing revenues grew 2.6% at constant currency and perimeter, also driven by increased streaming revenues. Merchandising and other revenues were up 2.3% at constant currency and perimeter thanks to stronger touring activity.

UMG’s income from operations was 278 million euros, down 7% at constant currency and perimeter (-4.2% on an actual basis) compared to the first nine months of 2014. Income from operations excluded restructuring charges as well as a legal settlement income in the first nine months of 2015, and the reversal of provisions in the first nine months of 2014.

UMG’s EBITA was 259 million euros, down 8.7% at constant currency and perimeter (-5.4% on an actual basis) compared to the first nine months of 2014, due to the revenue mix impact on margins as well as a difficult comparison against 2014 figures which include the favorable impact of a reversal of provisions.

Shares in VIVENDI have risen about 4.5% this year, while the STOXX EUROPE 600 media sector index is up nearly 15%t.

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