2021: Lagardère group restores profitability in 2021 with a sharp increase in recurring ebit to €249 million
Revenue for the Lagardère group came in at €5,130 million for 2021, up 15.6% as reported and up 18.6% like for like. The difference between consolidated and like-for-like revenue data is mainly attributable to a €29 million negative foreign exchange effect, and a €78 million negative scope effect relating chiefly to the impact of the disposal of Lagardère Studios and the acquisition of Workman Publishing.
Group recurring EBIT was a positive €249 million in 2021 versus a negative amount of €155 million in 2020, a sharp €404 million improvement. Lagardère Publishing reported €351 million in recurring EBIT with an operating margin of 13.5%, up sharply by €105 million on 2020. This record margin was driven by business growth, a favourable sales mix and disciplined cost control. Lagardère Travel Retail reported a negative €81 million in recurring EBIT, an improvement of €272 million. The flow-through ratio was 11.8% relative to 2019 as reported. This better-than-expected performance reflects the efforts undertaken by the division over the period to control its costs and optimise opening hours when stores reopened.
The Group’s free cash flow amounted to an inflow of €456 million in 2021, versus an outflow of €256 million in 2020. This sharp improvement is mainly the result of the more favourable business environment and positive working capital dynamic over the period.
Net debt fell to €1,535 million at 31 December 2021, from €1,733 million one year earlier, representing a leverage ratio (net debt/recurring EBITDA) of 3.6x. The Group’s liquidity position is solid, with €2,039 million in available liquidity (available cash and short-term investments reported on the balance sheet totalling €937 million and an undrawn amount on the revolving credit facility of €1,102 million).
Outlook for 2022
The effects of the health crisis and gradual easing of restrictions, the timing of which remains uncertain due to the various emerging Covid-19 variants, are different for Lagardère Publishing and Lagardère Travel Retail. Amid the current environment, Lagardère is pressing ahead with its Group-wide cost cutting and cash control efforts, while remaining alert to development opportunities.
For Lagardère Publishing, as the health situation gradually improves and cultural activities resume, book sales are likely to be less buoyant in 2022, a year that will also be marked by the absence of curriculum reform in France and of an Asterix. Thanks in particular to the integration of the acquisitions completed in 2021 (mainly Workman Publishing) and a new round of curriculum reforms in Spain, however, consolidated revenue (excluding currency effects) at Lagardère Publishing is expected to be stable in 2022. Profitability will be impacted by the less favourable market trends in a context of inflationary pressure on costs. Accordingly, Lagardère Publishing expects to post an operating margin of just above 11% for 2022.
Trading at Lagardère Travel Retail closely mirrors trends in air passenger traffic in the different geographic areas. Due to the diversity of its footprint and operating segments, the division is well placed to benefit from the resumption of flights as and when the health situation permits. Although the context is broadly improving, it remains uncertain. The division will closely monitor developments in air traffic in 2022 and is confident in its ability to adapt to the environment which, although volatile, is gradually improving. Lagardère Travel Retail is pressing ahead with its operational excellence drive launched during the crisis, enabling the division to keep flow through in 2022 within a range of 15% to 20%, assuming higher business levels than in 2021.
As regards Other Activities, efforts to reduce corporate costs will continue in 2022, with a target of a further €10 million reduction to €35 million during the year, representing a 50% reduction in three years versus 2019.