Berlusconi-backed MFE sticks to targets despite tough start to year
Reuters
Published May 25, 2022 07:42
Updated May 25, 2022 13:06
By Elvira Pollina
MILAN (Reuters) -Italy's MediaForEurope (MFE), which is seeking to establish itself as a counterweight to U.S. streaming giants, confirmed its 2022 guidance despite the impact of higher costs from content such as sports rights on its first quarter profit.
The TV group, controlled by the family of former Italian Prime Minister Silvio Berlusconi, still expects "positive economic results and a positive free cash flow" despite risks posed the Ukraine war and inflationary pressures.
The country's top commercial broadcaster expects advertising revenues in Italy, its main market, to rise 1% this year and will have costs of 1.8 billion euros ($1.9 billion), Chief Financial Officer Marco Giordani said in a post-results call.
No clients had cancelled any of their planned campaigns, said Matteo Cardani head of the company's Italian advertising operations.
Previously known as Mediaset, MFE makes the bulk of its turnover in Italy by selling advertising space on its free-to-air channels such as Canale 5. It is facing stiffer competition from online giants and streaming service platforms.
As part a European expansion strategy seen as its response to such challenges, MFE has built a stake of more than 25% in German media group ProSiebenSat.1.
The group also expects later this year to launch a bid to buy the stake it does not already own in its Spanish subsidiary Mediaset Espana.
PROFIT FALLS
In the first quarter it reported gross domestic advertising sales of 460.9 million euros, versus 452 million euros the year before.
"We think that management's guidance could still be realistic, assuming a worsening of the advertising trend in the next quarters and the phasing of operating costs," Intesa Sanpaolo (BIT:ISP) analysts wrote.
Their counterparts at JP Morgan have a more cautious stance on the company's advertising trend in its domestic market as they see a full year decline of 1%.
Giordani said that in a scenario of a weaker revenue trend in its key domestic market, MFE would be able to reduce its cost base by up to 3% in Italy.
Listed in Milan but registered in the Netherlands, MFE posted a first-quarter group operating profit of 15.3 million euros compared with 67.9 million euros in the same period last year.
Get The App
Total costs rose to 639 million euros from 566.3 million.
MFE A and B shares were down 0.3% and 1% by 1055 GMT after they dropped as much as 1.9% and 4.2%, respectively. ($1 = 0.9355 euros)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.