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MFE Media for Europe (MFE) reported a strong financial performance for the fourth quarter of 2024, with consolidated net revenue reaching €2,049 million, marking a 5% increase compared to the previous year. The company’s adjusted net profit surged by 27.2% to €266.1 million. Following the earnings announcement, MFE’s stock price rose by 1.12%, closing at €4.51. According to InvestingPro data, the company maintains a "GREAT" financial health score of 3.17, with particularly strong cash flow metrics. The company’s strategic focus on cross-media integration and digital growth contributed significantly to these results.
Key Takeaways
- MFE’s net revenue increased by 5% year-over-year.
- Adjusted net profit grew by 27.2%.
- The company’s stock price increased by 1.12% following the earnings report.
Company Performance
MFE Media for Europe demonstrated robust performance in Q4 2024, driven by its effective cross-media strategy and strong digital platform growth. The company reported over 1.2 billion views across its digital platforms in the past 12 months, with a combined growth of over 30% in total time spent by users. With a market capitalization of €2.86 billion and a P/E ratio of 11.51x, MFE’s market leadership in TV advertising remains strong, with a 40% share in Italy and 27% in Spain.
Financial Highlights
- Revenue: €2,049 million (+5% YoY)
- Adjusted EBIT: €370 million
- Adjusted net profit: €266.1 million (+27.2% YoY)
- Free cash flow: €343.3 million (+23% YoY)
- Net financial position improved from €900 million to €692 million
Outlook & Guidance
Looking ahead, MFE expects a flat performance in other revenue streams for 2025 while maintaining a net debt to EBITDA ratio below 1x. The company has secured broadcasting rights for the FIFA Club World Cup, which is anticipated to bolster its content strategy. MFE proposed a dividend of €0.27 per share, reflecting an 8% increase from the previous year. InvestingPro data shows the company offers an attractive dividend yield of 5.61%, significantly above its 5-year average of 12%.
Executive Commentary
Marco Giordani, CFO, emphasized MFE’s ability to generate significant cash flow even during challenging periods, stating, "We have proved to manage good years and bad years always generating remarkable cash flow." Matteo Cardani, Managing Director, highlighted the strategic importance of television and cross-media integration, saying, "Television at the core and cross-media reach offering the best in terms of maximizing investment is a safe harbor in times of uncertainty."
Risks and Challenges
- Potential cost increases in Spain due to new labor rules and local content investment.
- Market saturation in traditional TV advertising.
- Economic fluctuations impacting advertising revenue.
Q&A
During the earnings call, analysts inquired about the advertising revenue outlook for Q1 2025, to which MFE responded that it expects similar performance to Q1 2024, with Italy’s advertising growing by approximately 1% and Spain showing signs of market recovery. There were no specific plans disclosed for additional ProSieben share purchases. For deeper insights into MFE’s financial health and growth prospects, including 6 additional exclusive ProTips and comprehensive valuation metrics, visit InvestingPro.
Full transcript - MFE MEDIAFOREUROPE NV B (MFEB) Q4 2024:
Conference Operator: Good day and thank you for standing by. Welcome to the MFE Media for Europe twenty twenty four Full Year Results Web Phone Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there’ll be a question and answer session. Please be advised that today’s conference is being recorded.
I would now like to hand the conference over to your first speaker today, Zara Bersam. Please go ahead.
Zara Bersam, Conference Host, MFE Media for Europe: Good evening, ladies and gentlemen, and welcome to the full year twenty twenty four results presentation of MFE Media for Europe. Today, the speakers are Marco Giordani, CFO of the group and Matteo Cardani, Managing Director of Cubitalia. I will hand over immediately to Matteo for the audience and advertising outlook. Matteo, please go ahead.
Matteo Cardani, Managing Director of Cubitalia, MFE Media for Europe: Thank you, Sarah. Thank you, everybody, for attending. Today, we’ll go through our fiscal year ’20 ’20 ’4 results and provide a brief outlook on key indicators for the current trading period. We’ll begin by analyzing the overall economic scenario with closing data ’24 and early indicators ’25 in Italy and in Spain, countries where the outlook is still moderately positive despite the current period of high uncertainty. Actually, we consider the four key indicators of the macroeconomic scenario, which are relevant advertising evolution, generally speaking before the tariff was exploded, they were moderately positive, low inflation under control, GDP is showing positive progression, low single digit, moderate positive trend for consumption of goods and services.
And therefore, confidence indexes are fluctuating around stability with very low variance. This is what is shown in chart number three. And turning to the advertising market at Page four, the overall 2024 performance is positive, Italy, plus 3.9% Spain, plus 4.2%. As you can see in the chart with positive trends of our main media, TV, radio and digital. Television in Italy had a particularly strong positive trend in 2024, thanks to sporting events and the generally good performance of the medium overall.
While in Spain, linear TV will remain stable. And if we add Connected TV, the overall trend for the main medium is single digit positive. In this context, NFE cross media strategy continues to combine the stability of traditional media, TV and radio, with opportunities for growth in new market segments. And so by adopting a flexible approach, we integrate legacy and digital media leveraging synergy between Italy and Spain to announce local and international business opportunities. As we can see in chart number five, we enable our clients to plan a campaign across different media platforms, delivering a total reach that even over the top players cannot match.
As shown on slide number five, we achieved a higher monthly reach among all those higher than Google and Meta in both countries. So now speaking about volume and product growth, and we see IDB remains an essential part of any medium plan, whether considering broadcaster only, full screen only, or total screen. We’re leading commercial target total audience within the broadcaster only segment, as you can see in chart number six. And we hold 40% share in Italy and 27% in Spain, as you can see in chart number seven. If we expand the view to first screen only and we include over the top estimates, the two graphs at chart number eight reveal that over the top services account for just 6.1% in Italy and 15.3% in Spain.
The difference of this percentage in the two countries is due to differences in the digital adoption and also the subscription video on demand services penetrations. We have estimates that they are around 40% in Italy versus 65% in Spain. Going ahead, we must remark the fact that the key factor in strengthening our total video total audience proposition is the solid performance of our in house content production that which reinforces both the resilience of linear television and the growth of our digital platform. As you can appreciate in Chart number nine, in both countries, our top programs benefit significantly from Connected TV and digital screens uplift, delivering net audience growth ranging from 8% to 50% depending on each program. And they enhance both reach and audience profile.
And this content strategy has an impact on our digital offering that is evident in key performance metrics shown in Slide number 10, because in terms of total time spent, we are experiencing a double digit growth. The combined growth rate is above 30%. And we rank among the leading European broadcaster with over 1,200,000,000 overview in both countries over the past twelve months. As you can see from this dashboard with all digital KPIs, they are all positive and set unique browsers in Spain and that this is a work in progress. We are addressing through a single OTT brand strategy aimed at migrating the current brand MiTailer to the null platform, the well known successful brand in Italy.
So these two remarks with regard to content and technology are quite significant in the NFE perspective because they offer evidence about potential synergies in content exploitation technology platform beyond the cross country, cross selling commercial opportunities. Then another interest in the market, already commented on this KPI in the past conference call. In Slide number 11, you can appreciate the fact that there continues to be a positive multiplier effect between linear and digital. So we love to say that each hour of content consumption from linear to digital generates higher revenue per hour. And now we can therefore affirm that the variety of our cross media offering, which generate unmatched volumes compared to competitors combined with technology driven price leverage has led to a shift in our clients’ media mix.
And you can appreciate this number in chart number 12 for Italy and 13 for Spain. In both countries, advertisers are increasingly investing across multiple NFE platform. As said, so far nothing matches the scale and the flying reach of linear media, which when integrated with addressable advertising creates an unparalleled cross media reach. And the pursuit of maximum reach is one of the key driver in the growth of cross media advertising within our client base. In Italy, the share of MEC clients investing in its free media platform has increased from 66% in 2019 to nearly 82% in 2024.
And it’s a remarkable effect that digital auto home is entering the perimeter of the new consolidated medium in 2024. And in Spain, we have significantly a similar trend rising from 30% in 2019, sorry, to 63% in 2024. Now let’s move on the final chart of my presentation before passing over to Marco. The advertising performance in fiscal year twenty twenty four is definitely very positive, 4.7%, the combined result of NFE. And it’s the combined result of plus 6.8% in NFE Italy, better than the advertising market and minus 0.5% in Spain, aligned with linear TV trend.
So as I said, the overall performance reflects the combination of a steady or slightly positive trend in linear media and a strong double digit growth in reversible media, which continues to represent a growing share of our business. So thank you, and I hand over to Marco.
Marco Giordani, CFO, MFE Media for Europe: Thank you, Matteo, and good evening also from my side to everyone, and welcome to the full year 2024 presentation. At Page 16, you get the highlights that clearly show how the fiscal year ended in a very outstanding way, honestly, better than we thought at the beginning of twenty twenty four. Consolidated net revenue amounted to EUR 2,000,000,900 and almost EUR 50,000,000 plus 5% compared to 2023. And adjusted EBIT excluding non recurring items of €370,000,000 Just to remind that the non recurring components was almost €50,000,000 and refer to layoff and reorganizational expenses. Reported operating profit grew by 18% compared to 2023.
Then clearly entering below the EBIT, you can see and probably you have already read from the press release, we were forced following the proceedings at times provided by Board decision to, let’s say, use the treasury shares in the deal, let’s say, signed with GA regarding the minority interest of the non core activities. We were forced, as I said, according to AAS thirty six to align the shareholding, our shareholding to the value that their Supervisory Board, let’s say, decided for their shares. And for this reason, we were forced to have, let’s say, a write down of €128,200,000 on our foreseeable 29.9% stake. As you know, clearly that has been a non cash, let’s say, item. But clearly, that’s a pretty, let’s say, not forecasted, let’s say, action, we were forced to carry it out on our balance sheet following the procedure and supervisory board decision.
Adjusted net profit, excluding the just mentioned post mensatite slide down amounted to €266,100,000 with an increase of 27.2% compared to the same figure of last year. Another important element was the free cash flow that was extremely high and reached €343,300,000 much more higher than last year number, plus 23%. And that clearly is something that caused a pretty sharp reduction in our net financial position that fell from €900,000,000 at the end of twenty twenty three to a little bit less than 700,000,000 in at the end of twenty twenty four. And that has been achieved despite the distribution of €140,000,000 of dividends during the year. As far as the group net financial position for financial covenants purposes, that was below €600,000,000 compared to €740,000,000 of the previous year.
These outstanding results will enable the group to finance its strategic development and once again reward also all our shareholders. And that’s the reason for which the Board of Directors today resolved to propose to the shareholders meeting the distribution of a gross ordinary dividend related to the financial year 2024 of 0.27 per each ordinary Class A and Class B shares with a pretty important increase of plus 8% of the previous year dividend payment. Then entering in Page 17 in the operating segment, Italian and Spanish operating segment. I will not comment again the advertising revenue, just a little comment of the other revenue line for which we registered an increase of 13.3% over 2023, reaching €322,000,000 At the EBIT level, we registered an impressive plus 50%, almost 50 increase with the €221,000,000 level. In terms of cost, we were we are fully aligned with the guidance we gave you.
We were managing the cost base with a great efficiency approach. We built up a strategy to adapt the cost base in relation to the revenue evolution allowing the company to increase the profitability quarter by quarter. As far as the Spanish business is concerned, again, without commenting the advertising revenue, the other revenue line went up to €84,700,000 and the cost was €678,000,000 in 2024. We have anticipated the fact that we wanted to focus on the local content. And so our programming grid was financed with new money to, let’s say, to achieve the local content strategy.
In any case, at the year end, the EBIT in Spain was 150,000,000 almost, representing almost 18% EBIT margin. That is the highest number among the European broadcasters. Moving to Page 18 and at the group level, I can give you also some guidance regarding 2025. We are expecting other revenue to be roughly flat compared to 2024. In that respect, a great, let’s say, not certain and variable forecast is the one regarding theater, theater revenue that clearly will depend a lot on many condition and also depending on, let’s say, distribution of fiction and movie to other platform.
But I mean, our guidance for other revenue at the group level is roughly flat on 2024. Regarding the cost side, clearly, we are navigating in a very complex and unpredictable macroeconomic scenario. But in any case, this is something we have already proved to manage pretty efficiently. And so we can anticipate that also in 2025, our performance on cost will be driven by efficiency. In Italy, the cost base will not grow more than 1%, probably a little bit less than that.
But in any case, that’s our target. And in Spain, on the other hand, we will have some cost increase of roughly €20,000,000 caused by two main factors. The first one is not really caused by us. Mean, the cost of labor rules in Spain changed, creating a pretty substantial increase in the unit cost of labor. And the second reason is the one that I already mentioned, the pretty important intention to invest in local content to further boost our audience share.
Frankly, the first result in the first quarter are already pretty clear. We are now on track and the investments we carried out last year and the ones that we carried out in the first quarter twenty twenty five are proving to be efficient and directed to the target. Always in Page 18 and moving below EBIT line at the group level, financial charges was negative last year for almost €24,000,000 in line with our expectation and guidance. Clearly, a lower number compared to last year, thanks to the ability of the group to generate cash and to decrease the debt level. In the result from investment accounted with equity measures, you clearly find the write down already mentioned on proceed and stake.
As I said, was a noncash item and but it’s something we were forced by the rule to take it. And clearly, I have to move to the next year, so the 2025, let’s say, guidance in that respect, we can guide you on a €25,000,000 financial charges. And on the associate line, we confirm the guidance of around €15,500,000 excluding any impact on proceeding because as you know and you can imagine, we don’t know anything about them. So it’s very hard to make any forecast in that respect. Moving to the investment, CapEx mainly, Page 19, clearly everything in line with what we guide you.
I mean, no big issue, $375,000,000. On that number, that frankly is €10,000,000 below our expectation because we had some phasing issue. So probably moving to 2025, we will have this phasing effect affecting 2025. But all in all, we are targeting the same amount than 2024 also in 2025. Lastly, page 20, free cash flow.
We already mentioned at the beginning of my presentation was a very outstanding performance, euros $343,000,000, let’s say, cash flow generated in 2024 plus 22% compared to 2023, a remarkable, I believe, performance. That clearly helped to reduce the financial debt. Debt went down from €900,000,000 at the end of twenty twenty three to $692,000,000 at the end of twenty twenty four. And sorry to remind you again, but I mean in this number we have distributed €150,000,000 1 hundred and 40 million euros in dividends to all MFE, made for Europe Shareholders. Mean, MFE has once again demonstrated the ability to convert profit in free cash flow because that we believe is our main objective.
And we did it while maintaining a high level of industrial investment. And we had a cash flow conversion of almost 96.5% and that’s clearly the best result we could have thought about. Entering before entering in the Q and A section, I would like to remark that the future is pretty uncertain, but we are pretty sure and we have also proved in the recent year to manage good years and bad years and always generating a pretty remarkable cash flow and reducing the debt level on a like for like basis. And that has always been done without forgetting about our shareholders. And so we were able to combine industrial investment and shareholder remuneration.
That’s more or less all I have to say. I just leave you with Page 21. That’s something that is reminding a little bit the dividend that the Board of Directors has just approved. How is compared to the past and also how is compared to the price of the shares being the effect of change. And I just wanted to end my presentation saying that on a like for like basis, we are still targeting our net debt to EBITDA ratio below one times also for 2025.
Now I’ll leave you the room for any questions. Just to remind you that in any case, we are not in the position to answer to any question regarding the offer on proceeding because as you can imagine, we are restricted by confidentiality. And so the only thing we can say, it is what has been already announced. And so please don’t ask me anything more because we’re not in a position to answer. So it’s now time for you to pose any questions like that.
Conference Operator: Thank you. We will now go to our first question. One moment please. And your first question comes from the line of Julian Rock from Barclays. Please go ahead.
Julian Rock, Analyst, Barclays: Yes. Good evening, everybody. Two questions for Matteo, one for Marco. On page 10, you are giving us for the first time, I believe, your number of hours on demand. Could we get the total number of hours in both countries or the linear hours in both countries?
That’s my first question. Then the second one is you gave us Q1, but we have some indication on April. And then the last one for Marco, I know you just said, don’t ask me anything about the Proziban offer. So I won’t ask anything about the offer. Once the offer is finished, you are already above 30% because there was a press release today saying you were at 30.09%.
And according to German regulation, if you have more than 30%, then you can buy the shares in the market. So after the offer, so I’m not asking you a question, regarding the offer, but after the offer, as you can buy, shares in the market without paying a premium, what’s your intention, post offer, regarding buying ProSieben shares in the market? Thank you.
Marco Giordani, CFO, MFE Media for Europe: So I’ll start answering, very, very directly. I mean, we said in the press release that the main intention of the offer was to gain flexibility on the future and having a little bit more to say on Proceben. And so we have no target in that respect. We will see what will be the outcome and then decide. We don’t have any specific plan and we will decide afterwards also depending on external condition and specific condition of the company.
No target in that respect.
Matteo Cardani, Managing Director of Cubitalia, MFE Media for Europe: Okay. Thank you for the question. So if I got it right, the question is about how to compare the digital KPIs and shown in chart number 10 with the trend of linear television in both countries. Am I right?
Julian Rock, Analyst, Barclays: Yes. You give us the total you give us the on demand hours. So nine nineteen in Italy, can we get the linear hours or the total hours?
Matteo Cardani, Managing Director of Cubitalia, MFE Media for Europe: Now, things I can share is that compared to this double digit growth time in total time spent in our, let’s say, extended television, so connected TV and digital on demand consumption, The baseline for linear TV is quite stable in Italy, around zero, minus one and minus two according to different periods, but the combined effect is definitely positive. We are honestly in 2024 suffering a little bit more in Spain where both of us, I mean, at ResMedia and Mediaset Espana are suffering for a single digit decline in linear TV audiences. But the interesting thing, as Marco mentioned before, we are investing a lot in our own content and the initial results in Q1, even in Spain, are quite positive and encouraging results. We have definitely positive results mainly in prime time. We gained leadership in five big times out of the seven days a week in Spain.
So that’s why I say we are generally speaking confident even for the outlook of Q1.
Julian Rock, Analyst, Barclays: Okay. Okay. And then on vehicle trends?
Matteo Cardani, Managing Director of Cubitalia, MFE Media for Europe: Okay. Now with regard to our if we want to go ahead and just sharing some initial indicators This is what is already written in our press releases. So for the time being, we do not see any negative impact on the group advertising sales in the short term, referring to the macroeconomic uncertainty and the continued tariff over and waiting on ad budget. For Q1, we have Italy that is growing around 1% compared to the same period of last year.
And it’s remarkable the fact that last year in Q1, we grew by 5.7%. While in Spain, the advertising market had a low a slower start in Q1 also due to the difficult comparison with the same period last year when it grew by 8%. But however, as we say, the group sales in Spain are recovering and recovering during the quarter, thanks also to the positive encouraging audience results, although they remain slightly negative overall. So we do we can show the fact that overall the MFE Group advertising revenue in the first quarter twenty five are similar to those we had in the first quarter twenty four. That’s it.
Julian Rock, Analyst, Barclays: Thank
Conference Operator: you.
Matteo Cardani, Managing Director of Cubitalia, MFE Media for Europe: We
Conference Operator: will now take the next question. And your next question comes from the line of Milo Silvesta from Equita. Please go ahead.
Marco Giordani, CFO, MFE Media for Europe: Yes. Good afternoon. Good evening, everybody. Two questions from my side. The first one is a follow-up on advertising.
So if you can elaborate a little bit more on what you expect on the year? And the second one is on the free cash flow guidance. If you could provide some update on that and if you see achievable level, the three €40,000,000 achieved in 2024? Thank you. I’ll start answering to the free cash flow question.
I mean, clearly, it’s all depending on the top line. So it’s very hard to answer any guess or uncertainty and as far as visibility. Whatever we can say is that we have proved to convert profit in free cash flow and that’s it’s our main objective. As far as what the market will do, clearly, cannot do anything about. The only thing is that we need and we will certainly maintain and probably increase our market shares and cost discipline will allow us to maximize the cash flow.
In terms of the absolute amount, honestly, if you give me the top line, I can answer you, but I don’t have the top line, so it’s very hard for me to answer you. Last year was really an outstanding performance, but was also driven by a stronger top line development. So unfortunately, no precise answer. I think that the track record is there to say and I can confirm that cash conversion and free cash flow generation are our top priority, nothing else. Patio?
Matteo Cardani, Managing Director of Cubitalia, MFE Media for Europe: Okay. I thank you for the question. Regarding what is our outlook for the full year, of course, it’s reasonable to say that due to the high uncertainty and volatility of the international macroeconomic environment is difficult to say, but we are, let me say, quite positive because I start from the end. My point is that we continue to have comparison with 2019, the year first, the COVID outbreak. And it’s quite significant because if you consider the last five years time period, we went through, I mean, when I say we, I mean advertisers, broadcaster, agencies, we went through a series of, let’s say, black swan situation now, COVID, the outbreak of the war in Ukraine, the energy crisis, high inflation, then down.
Now the uncertainty is unpredictability of the tariff war. But let me say that there are a lot of lesson learned on the advertiser side, and there are strong reason for brands to decide that the best course is to stick with existing plans to protect the baseline of their business. And let me say that our offer with television at the core and across media reach offering the best in terms of maximize reaching for the investment is a safe harbor in times of uncertainty. And that means that if we take a look after the Q1 to the remaining part of the year, we do expect that the advertising collection could be expected to be more favorable in the coming quarters because we have some easier comparison with last year. And it is worth mentioning that the group both in Italy and Spain and other case for a synergy cross country, We have secured the availability of the free to air TV rights of the best big time match of the first edition of the Club Football World Cup that will be held in North America in June and July.
While last year, our competitors, broadcasted the major international sporting events. So let me say that, thanks to the short term stability in advertiser decision on their budget combined with the strength of our offer plus the added value of a sport event in June, July, the the rights of the FIFA World Cup four plus. Our outlook is combined with a limited viewability, but it’s moderately positive. So I hope to have answer to your question.
Marco Giordani, CFO, MFE Media for Europe: Thank
Conference Operator: you. We will now take the next question. And the question comes from the line of Andrea Rondon from Intermonte. Please go ahead.
Andrea Rondon, Analyst, Intermonte: Good evening and thanks for taking my questions. Just a couple from me. The first one is about your average cost of financing for 2025. If you can remind us this number. And the second one is just an update.
I mean, it’s a it’s a very frequent question, but still, I’m asking if you can tell us something new about eight hours, so any deal is approaching or not. Thank you.
Marco Giordani, CFO, MFE Media for Europe: Yeah. As far as the cost of debt, our plan is that it’s going to be below 2%, all included. So we are not expecting frankly any material changes in that respect and it is also a similar number we had last year. As far as eight hours is concerned, I mean, I have nothing to say in particular. As you know, we are working with Rye.
Clearly, it’s not a fast process. There are all there are a lot of, let’s say, bureaucratic steps to pass through clearly not on which clearly we’re not so accustomed to, but that’s the case. So what I can tell you is that I don’t see any major step in the near future. We are working. Let’s hope that one day or the other something will happen, but for the time being no foreseeable step in the next week or month.
Andrea Rondon, Analyst, Intermonte: Thank you. Thank you. Good night.
Zara Bersam, Conference Host, MFE Media for Europe: Okay. Thank you, Marco and thank you, Maceo. Thank you very much guys for your time. As always, the Investor Relations department will be available for any questions you may have. Have a great Easter break.
Conference Operator: Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.
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