Strategy

Strategic repositioning confirmed

Major business model de-risking path.

The ability demonstrated by the Mondadori Group in 2020 to react promptly to a strongly deteriorated context, as well as the financial solidity shown by the capital position at year end, give reasons, from an operational point of view, to be optimistic all in all on the future development of the business and the results that the Group can achieve in the new year.

From a strategic point of view, the Group has all the managerial and financial resources required to continue along the path of strengthening its core businesses, of expanding into new segments in or adjacent to publishing, and of rationalizing, if possible, non-strategic activities consistently pursued in recent years, including through M&A operations.

More specifically, in 2021 Mondadori intends to continue to consolidate its leadership in the Books area – both in the school textbooks and Trade publishing segments, increasing its relevance and impact on the Group’s overall activities – and to complete its skills and solutions in the digital area.

The current financial strength gives reasons to believe that during the year the Group will be able to firmly and actively pursue any acquisition opportunities that may arise, as well as to pave the way for a possible return to a shareholder remuneration policy from 2022, applied to the net result of 2021.

Outlook 2021

The positive performance seen in the opening months of the year, driven in particular by the strong growth trend of the Books market, as well as the continued cash flow generation, allow the Group to forecast at consolidated level – and with the current consolidation scope – an improvement on the estimates previously disclosed.

Performance targets

• Revenue in 2021 is forecast to grow slightly (low single-digit), basically confirming the previous estimate resulting from:
  • an improvement in revenue from the Trade Books segment versus expectations at the beginning of the year, linked to the higher growth of the Books market, albeit with a gradual normalization versus the trend seen in the first quarter;
  • the postponed resumption of museum activities and a more gradual recovery than previously expected in revenue from the Retail area, due to the impact of the tougher restrictive measures.
• the current forecast for Adjusted EBITDA reflects a moderately improved net contribution from the combined effect of the above trends, in addition to the effect of the relief awarded to the Group for museum activities: as a result, margins at consolidated level are expected to settle in the upper part of the range previously disclosed (11%-12%), namely around 12% of revenue.
• The net result for 2021 is confirmed to rise sharply, due also to two “one-off” effects:
  • the resort by the Group to the relief arising from the tax realignment on part of the intangible assets, which will allow the recognition of a significant positive tax component;
  • the impact on the 2020 result of the write-down of certain balance sheet items that is not currently expected in 2021. 

Cash Flow and Net Financial Position

Additionally, with regard to the Group’s financial debt, one can reasonably expect an improvement on previous forecasts, due to the continued robust cash generation recorded by the business in the last six months: specifically, the new forecasts show the cash flow from ordinary operations settling in a range between € 50 and € 55 million (versus the previous range of € 40-€ 45 million), which allows the Group to confirm the achievement, before the impacts from the adoption of IFRS 16, of a positive consolidated net financial position at year end.

Conversely, taking account of the impact of IFRS 16, indications point to a Group financial debt no greater than 0.7x Adj. EBITDA (from the previous 0.8x).