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ATRESMEDIA: FY2019 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'19 vs. 4Q'18 Results:
Sales: € 315.73 M (+7.1% vs. -4.9% BS(e) and -1.5% consensus);
EBITDA: € 57.54 M (-8.9% vs. -15.8% BS(e) and -14.6% consensus);
EBIT: € 52.65 M (-10.0% vs. -15.9% BS(e) and n/a consensus);
Net Profit: € 37.75 M (+1640.4% vs. +1499.8% BS(e) and +1732.6% consensus);
FY2019 vs. FY2018 Results:
Sales: € 1.039 Bn (-0.3% vs. -3.7% BS(e) and -2.7% consensus);
EBITDA: € 183.9 M (-1.7% vs. -4.1% BS(e) and -3.7% consensus);
EBIT: € 164.4 M (-2.5% vs. -4.5% BS(e) and n/a consensus);
Net Profit: € 118.0 M (+33.8% vs. +30.4% BS(e) and +36.1% consensus);

The results came in above expectations thanks to the stronger sales in content production and distribution. The 4Q’19 sales grew +7.1% (vs. -4.9% BS(e) and -1.5% consensus) thanks to the strong sales growth in content production and distribution, which reached € 45.5 M in 4Q’19 (vs. € 9 M in 4Q’18 and € 9.5 M BS(e)). 2019 sales fell -0.3%, with TV advertising sales sliding -5.8% (in line with expectations), digital sales growing +6.5% (below our estimate of +10.1%), content production and distribution sales up +65% (above our estimate of +4.5%) and radio sales +0.7% (vs. +1.9% BS(e)). 4Q’19 EBITDA also beat our estimates thanks to the stronger sales, coming in at € 57.5 M (-8.9% vs. -15.8% BS(e)), leaving EBITDA’19 at € 183.9 M (-1.7%), with the margin standing at 17.6% (vs. 18% in 2018).
We expect a positive reaction on the market as a result of the improved sales and EBITDA (to a lesser extent, due to lower margins in content production and distribution business). The focus in the conference call (13:00 CET) will lie in the visibility to be given on the advertising market, as well as the company’s diversification plans. Despite the fact that the high dividend yield (15%) could underpin the stock, we reiterate caution due to the weak TV advertising market. SELL. T.P. € 3.60/sh. (potencial +20.64%).