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Good day and welcome to the TFI Q1 2023 Results Conference Call. Today's call is being recorded. I would now like to hand the call over to Pierre-Alain Gerard, Executive Vice President of Finance. Please go ahead, sir.
Thank you. Good evening, everyone, and thank you for joining us. I'm glad to be here I think for the first time TFIs first quarter 2023 results as the Group new CFO. I'm very excited to take on this new position as the Group begins a new chapter with a new strategy that I am confident will drive long term sustainable value.During today's call, we present the business highlights of our two operating segments, provide a more detailed breakdown of our financial results. And lastly, discuss our outlook and we'll have a Q&A session at the end of my presentation. For those of you who are joining us via the phone note that we are displaying a presentation which you can follow through the webcast. You can also find it on our website.With that let's turn to Slide 2 to [cover] the quarterly highlights. In Q1 2023 we were able to further consolidate our leadership position and manage to increase our Group's audience share in [EMEA] at 0.1% on both commercial targets and that respectively 0.6% and 0.2% on women below 50 purchaser decision maker and individuals aged between 25 and 49 on TF1 Channel.In the media sector, advertising revenue might differ and continue to show a good momentum. Driven by strong demand, it amounted to €20.2 million at the end of March 2023, up 17.3% compared to the first quarter of 2022. This is a very positive sign as the Group expands into the digital.Eventually TF1 reached a net cash position of €468 million versus €326 at the end of last year, benefiting from a strong cash flow generation during the period, demonstrating the strong financial position of the Group.We proved once again, our agility in spending, notably on programming costs allowing us to largely offset the decline in advertising revenue that the industry is experiencing, while we continue to increase our audience share.Finally, I'd like to share with you that the Group signed today a new agreement with the ARCOM, allowing it to broadcast on the DTT frequency starting May 6, and for a period of 10 years.The Group will continue to offer its content to a large audience via DTT and reaffirms its social and creative commitments. This agreement stands in the continuity of the previous one, notably from a financial standpoint.I will now present the key points of our business activities during the first quarter. This is on Slide 4. In the first quarter 2023 the TF1 channel maintain its leadership across all social demographic segments and made significant progress on commercial targets, confirming our growing leadership position on linear activities.In particular, the TF1 channel achieved a solid audience share of 22.6% among women below 50, 0.6% year-on-year representing a record audience share gap over the leading competitor during the first quarter. As for individuals aged between 29 and 49, the channel recording is strong 19.7% audience share, 0.2% year-on-year.If I move to Slide 5, what has been driving our strong viewership among a wide range of audiences is undeniably [TF1] strong lineup of content.In the first quarter,TF1 dominated top urgencies on Linear with its major franchises. As evidence, we recorded 7 out of the 10 ratings among individual aged 4 plus, thanks to a unique and differentiating programming offer across all genres. French drama, entertainment shows, sports events in use.The strength of our Linear lineup is and will be the key of our non-Linear expansion. First quarter performances illustrate the effectiveness and the adaptability of the Group content offering in both Linear and non-Linear avenues.For instance, more than 30% of the viewership of our attractive and [cellulose] brands, such as cellulose brands and Ici tout commence, is now done on non-Linear. Importantly, [indiscernible] is getting more and more traction for live consumption with record viewership numbers. Notably more than 1 million viewers streaming the French football team during the games in March.Regarding to the production segments, the first quarter was marked by a high basis of comparison, related to the delivery of Funeral for a Dog for Sky Germany in the first quarter of 2022. As well as you know, as the discontinuation of the program, [Plus belle la vie]We mentioned it during the full year 2022, in 2022 and UN studio benefited from the delivery of prestigious productions such as [indiscernible] [9:22] Apple TV plus, which have been available on the platform since February. And well ranked respectively the first and the third most viewed programs on the platform in France and in the UK during the first weeks.These great successes are paving the way for future partnership, notably with strong platforms, as demonstrated by the renewal of Marie Antoinette for a second season, which will be delivered in 2024.Despite the cancellation at the end of the quarter of a significant project for a platform which will try to compensate through the rest of the year. Our book of orders remain strong at the high level.We now provide you with an overview of the Q1 financial results. Note that and you will find the management's report and the financial appendix on our website.Move to Slide 8. On the consolidated revenue. It amounted €479.7 million at the end of March 2023, down €82 million, €81.6 million or 14.4%. On a constant structure basis, consolidated revenue is down €59.5 or 11%.Revenue for the major segments reached €419.1 million, down €66.4 million, as of the change in revenue is linked to a perimeter effect due to the unified disposals both on the advertising and non-advertising side. I will go in more detail.If you look at advertising revenue for the first quarter, which amounted €340.7 million, down €36.4 million without the perimeter effect linked to the disposal of Unify Publishers in q4 2022. Advertising revenue was in fact down 6.9% in Q2 -- Q1 2023, reflecting the impact of macro uncertainties, and sector specific tensions, as you know, especially on retail, food and finance during this quarter.[TF1] continues to deliver a solid advertising growth, plus 70% growth year-on-year first off by high demand. Non-advertising media revenue amounts to €78.4 million, down €30 million of which 22.3 is linked with the disposal of [Gannet and Econ] in 2022.UN Studio posted a Q1 2023 revenue of €60.6 million, a decrease of €15.2 million due to a high basis of comparison with the delivery of Funeral for a Dog for Sky Germany, as I mentioned previously in Q1 2022. The impact of the discontinuation of a [Plus belle la vie] is compensated by the acquisition that we made last year, including [indiscernible] [12:25]Next slide as a reminder for starting this year, we published a new indicator, current operating profit from activity the COPA, as you know we mentioned it already corresponding to current operating profit before amortization and impairment of intangible assets recognized and acquisition.Now our main KPI in terms of profitability. Group posted the current operating profit from activities of €39.9 million, down €21.5 million year-on-year. By sector, the operating performance is the following month.COPA for the media sector was €41.4 million generating a margin of almost 10%. Almost 80% of the evolution of the advertising revenue on a constant basis has been mitigated by the decreasing cost of programs. It demonstrates once again, the Group's ability to adapt its costs, while improving its origin share on commercials target.Now let's break down the [€16 million] decrease in COPA for media. First of all, you must remember that in Q1 2022 our operating income into the part of the proceeds from the [Molotov] settlement it had been announced during Q1 2022. The comparison effect.A few other millions are linked to the advertising revenue decline, the small part which is not covered or mitigated by the programming cost. And finally, we have a few million tech costs linked with our digital acceleration plan and some non-recurring HR costs. And finally, the COPA for our new [indiscernible] [14:10] was minus €1.6 million.I move to the next slide. The consolidated income statement. Already discussed the revenue and the COPA lines, so let's move on to the operating profit.Its amounted to €33.6 million, which included non-recurring costs linked with our digital acceleration plan and real estate optimizations, the 5.2 charge that you see in the P&L.Net profit for the Group was €28.9 million, down €6 million, which is no longer include -- including our share of losses related to [center].Now we'll take a look on Page 11. At the evolution of our net cash position. [TF1] also see the strong net cash of €468.2 million at the end of Q1 compared with a net cash position of €326 at the end of December 2022.Our strong, free cash flow of €146.4 million was made of the following, operating cash flow amounted to €89.6 million, down €41.3 million year-on-year due to the decrease in activity for both media and UN.[Q1] change in working capital is usually good, especially this year. You have €131.5 improvements in working capital. It's notably explained by the collection of receivables linked to our strong Q4 2022, remember that we had the FIFA World Cup in Q4 2022.For the rest, the amount of lease obligation is mostly stable and we can say the same for CapEx, no other major flow over the period, but the strong free cash flow.Let's have a look at our outlook and targets for the rest of the year. The second quarter of 2023 will be marked by the return of powerful brands that are successful [Cellulite] franchises with strong potential on non-Linear, I'm talking about HP and messenger, particular.The second half of the year is set to benefit from an even full lineup with the Rugby World Cup in France, which will enable the Group to offer premium inventories to its advertising clients.Quick word on the strategy. During the fiscal year 2022 presentation we introduced our new 3 pillar strategic plan. So as we have always done we will focus on maximizing the value generated by our Linear advertising inventories.We believe Linear will remain a very solid business in the future since the reach we produce becomes increasingly differentiated, thanks to our very strong and superior programming lineup.In addition, this will enable us to develop a distinctive value for our customers and our pricing flexibility. We will accelerate our expansion in digital. Our goal is to establish ourselves as the first free to use streaming service in the French market. We are confident in our ability to develop our digital activity by mostly leveraging our strong Linear content and franchises which have proven to be highly adaptable to non-Linear consumption, as we've seen.There are digital expansion, we will strive to maximize the value of our digital inventory by strengthening our data collection strategy.Third, we will continue sustaining our studio business momentum by driving organic growth and value creation with our unique and award winning talents.Moving forward, TF1 Group will accelerate in digital, while delivering a broadly stable COPA margin versus 2022. Cash flow generation focus will be the key underpinning factor for new growing and stable dividend policy, growing or stable dividend policy.This clear roadmap supported by our strong financial position, we are very confident in TF1s near term performance and in its midterm substantial value creation potential.This concludes my presentation and I'm now ready to take your questions.
[Operator Instructions] And our first question comes from Julien Roch of Barclays.
[Foreign Language] First question is on that trend in Q2 [M6] had a third market which is a euphemism for was in Q1. So any color quarter you can give us on Q2 trend for television. That's the first question.Can we get organic [Newen] in Q1, i.e., x-FX and x-M&A. That's the second question. And then the third one, it's on cash. It's like 28% of market cap, a lot. So it is a very inefficient capital structure. As the new CFO, do you have any plan to change that inefficient capital structure? Or were you just going to do a peek through and swim in your money?
So regarding the advertising market for the second quarter, we stay in a relatively environment with a low visibility and April has started softly. But once again, we have demonstrated our ability to offset swings in advertising revenue by our agility on programming costs.And it's not really a surprise, this is already what we had talked about during our full year presentation, where we said that Q1 would start softly which was the case, so no surprise here. And we were -- that we were expecting the second half, which would be more dynamic.We think that we have a very strong lineup, which is probably -- we will be able to benefit from a better second half of the year.Moving on to Newen Organically we don't disclose the contribution of the M&A activities that we acquired last year. But Q1 organic growth for Newen is not necessarily very relevant because as you know, this is -- this is a contracting business and cycles are not necessarily following the cycles of accounting. So [Q1] is not necessary, irrelevant of what we think about the year for the one.And moving on to your third question about inefficient cap structure. We see it as a very positive. We have a new strategic plan and we are building it on very solid grounds. What I can say about the capital structure is that and we mentioned it already, either Philippe Denery or myself. It's very important to have a strong balance sheet given the lack of visibility on the advertising market. This is the first - the first point.Then, of course, if we identify a suitable M&A target, which fully fits our strategic goals, and fully fits our financial standards then we'll be extremely agile.And lastly, if the macro environment eases and the visibility gets better, if we haven't identified any M&A target, of course, the Board could consider -- reconsider its option especially on the you know, a special return to shareholders.
And we have no further questions in the queue at this time. [Operator Instructions] We have no further questions.
Should we wait a couple more seconds.
[Operator Instructions]
Okay, okay, maybe we should conclude. Thank you. Thank you again for listening and joining the call with us. Should you have any further questions, if not now or during the call, maybe it will come later. But don't hesitate to reach out to our Investor Relations team. And we'll answer your question. Thank you very much for joining. Bye.
That concludes today's conference call. We thank you all for your participation. You may now disconnect.+