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This is the Chorus Call operator. Welcome to the Q and A session on the March 31 results in 2025 of the Mondadori Group. Mr. Antonio Porro, the Managing Director of the group, after a short introduction will be available to answer your questions. To you the floor, Mr. Porro.
Thank you and good evening everyone. This time we are going to make a short introduction simply to make a connection between the presentation a couple of months ago about the 2025 guidance and the results of the first quarter this year, saying that our forecasts in actuality in terms of the 2025 first six months versus the second six months have actually come through perfectly well.
We say that not only, as you have seen, we confirm our guidance. Looking at the results in March and the first signal in April, we are exactly where we thought we were going to be four months ago when the guidance had been drafted, connected with the budget. What did we say that time and what we are pointing out today is the first four months of this year.
This is the snapshot at March 31st. We're about months with a number of non-structural issues which were very peculiar because in the first four months this year the comparison was to be with the first four months last year in which the resources made available by the old UP18 for the cultural burnout of the 18-year-old young people and especially in the final months would entail approximately EUR 30 million-EUR 40 million difference compared with the first few months this year because this money has been cut and this less available money has been seen. Also, according to GfK, of the overall results of all publishing houses in Italy in the first four months, April is the month when this is going to be confirmed because it was the last month during which 18-year-old people could spend those resources.
At Mondadori, the first four months this year are being compared with the first four months in 2024, which were the last four months of our own Roman concession for ticketing and the other services of the Colosseum area. These last four months of this important concession, which we had managed over the past 20 years, give you a relevant difference compared with the Q1 delta last year and this year, and all the publishing house had an earlier year and the end after the Christmas season, which was weaker versus 2024. Therefore, from the publishing standpoint, we were expecting a very weak start indeed. We made the point in terms of market forecast and we also made the point on Mondadori's performance.
I can tell you that in terms of earnings and selling, as we call it, the trade business is slightly better than our forecast. What is happening is what was announced a couple of months back. It is not by chance that we confirm the beginning of this year, of course, the results and the guidance of the growth. You have to bear in mind that March accounts for slightly more than 20% of the entire year. These are numbers where percentage values are big, but the real numbers are small. Just to translate it into a value. March 31st this year we have EUR 12 million difference of ticketed sales from 349 last year in the first three months to 337 this year, difference is EUR 12 million.
Which means that during the first three months of the year all the Italian publishing houses will sell approximately EUR 6 million compared to what all Italian publishers sold last year. We're talking about really small numbers. Also because the trade business goes through seasonality. This is the preliminary I wanted to make. For those of you who were not there when we announced the 2025 guidance. We're not going to occupy further space. I will leave the floor to questions.
We would like to ask a question. Please press star plus one on their phones in order to cancel your booking. star plus two, please. Please ask your questions. With a fixed phone, please press star plus one. Now the first question is by Antonella Frongillo from Intesa Sanpaolo to you the floor.
Yes, good afternoon to all of you. I would like to ask three questions.
The first one is on the earnings of the publishing houses revenues. Maybe it's part of the presentation, but I haven't yet seen that number. Can we see the performance net from those specific items, like for instance Star Comics, commercial situation or time-based promotions by distributors? That is, in other words, when it comes to the pipeline, there's no problem, because you had anticipated them. There are some elements which are not as clear and I wanted to quantify them so that I can fully understand the performance result. The second question has to do with guidance and EBITDA. Mr. Porro, in your call you were singling out that you confirmed the guidance and the margin, which is approximately 17% in spite of the fact that we still have pressures on labor cost and logistics. You think that you can set them off through efficiencies and pricing.
You also told us that there was a specific element in 2024, a one-off element. I was wondering what is happening there. Is it a one-off element? Is it not a one-off element? I wanted to get a better understanding on the impact that all this had in 2024. Third question, tax rate. You talk about different management of contributions versus the past. What are the expectations for this year?
We will talk about the tax rate, because these are different contributions this year versus last year. Would you like to begin answering this? Back to the second question, as to logistics. We have indeed defined the accurate forecast both in terms of the overall result in 2024 and the budget expectation.
In 2025, the differential which is favorable to Mondo should be worth approximately EUR 1 million-EUR 1.5 million of logistic costs less vis a vis the ones that have been calculated. There is a favorable differential and we would like to get further improvements of course, based upon the bid to select the logistic operators for 2026 and years to follow. There is a slight improvement. We have negotiated it and achieved it. We want to have a more marked efficiency in the years to come. This is the most recent forecast from the logistics standpoint. Now, when it comes to commercial operations, we have a selling which is less than the previous year, grouping all the homogeneous items in terms of trade book sales, which is minus 5%. That is the lack of selling vis a vis revenues net from promotions.
There are two temporary promotions, one which is very favorable a year ago on comics, which was not to be repeated this year. This is worth approximately EUR 3 million plus a promotional policy having an impact on audiobooks. One of the most important platforms that we are using is that there is a policy of discounts on monthly tags that more than offsets the listening volumes, which is growing by more than 10 percentage points, is 14%, which is more than the volume growth of audiobooks, which we expected. We have these two specific phenomena which substantially can be translated into a trend of revenues of the trade publishers performing better vis a vis sellout GfK data in the various chains. This is the answer to your first question.
When it comes to the second one between logistics and trade revenues, there was a question on the expected 17% of margin. Was it a separate question, Antonella?
No, it was a question which was connected between the comment that you have made concerning the logistic costs which are increasing, and the comment that was being made when you announced the 2024 results where we talked about a temporary impact on logistic. You answered me.
Yes, indeed I answered you. I gave you a few items more to get to a better understanding. We confirmed that in 2025 versus 2024 logistics will have some savings, not very big, but some savings. We are going to save on paper. We are saving a little more than expected from printing.
As we expected, as you have pointed out before, we will have a slight increase in terms of labor cost. As it happens with all the Italian production system and the overall trend, combined with a pricing policy which is selective and generous for the publisher, we think that at year end we will have a margin where 17% which I confirm now to Franzo.
Hello, Antonella. When it comes to taxation in the first quarter this year we have taken into consideration in our account some contributions to media prints worth EUR 3.7 million. That is a contribution to each sold copy and this is taxable and therefore relevant. Last year in the same quarter we took into consideration a contribution having to do with paper worth EUR 2.5 million.
As we have highlighted in the presentation of our results, there is a EUR 1.2 million delta favorable to media print which we have taken into consideration in this quarter. EUR 2.5 million last year for paper contribution are indeed not tax from the taxation standpoint relevant. We have a different basis and in spite of the pre-tax loss of the current year being higher than the last fiscal year, EUR 16.2 million this year, EUR 10 million last year. The amount of positive taxation is less and turns out to be less.
Next question is from Mr. Fabio Pavan, Mediobanca.
Thank you for having taken my questions. I have two questions, if I may. The first one, you have explained very well what happened during the first quarter and this was in line with the expectation.
Please would you single out the element associated and to support, so to say, the guidance. I am referring to market expectations which should catch up throughout the year. You talked about a stronger publishing program for the last quarter of the year. A comment on the support and incentives by the government. The second question has to do with media and digital revenues, which should be particularly supportive. Are they in line with your expectation or better?
This time for the first time you were not the first one to ask questions and indeed you are there. I was doubtful and worried that you were not asking questions. First answer.
When it comes to the regular catching up process, especially in the second part of the year, tomorrow there's going to be a meeting in Turin between the Minister of Culture and the representatives of the Italian Society of Publishers, because the large groups, the large publishers are not suffering because of a trend which is slightly negative for a few months, but when it comes to small publishers and independent bookstores and small chains are really very angry because over and beyond the publishing plans which were indeed going through up and downs over the years, public resources that are now lacking are a political choice by this government. Minister Giuli , after having been appointed Minister for Culture, in actuality tried to do something.
We were, if I remember well, in November last year by indeed announcing to indeed give another EUR 30 million as a yearly fund in the fourth quarter available to libraries so that they can purchase from local booksellers new books. This was a measure, an immediate measure, as an answer to worrisome signals on the general trend in the book market because of less resources given by the state, by the government. I perceive within the society as a kind of an optimism on some other measures.
I don't know whether tomorrow this is going to be announced or it's going to be announced in the weeks to come, but substantially, I believe that besides actually bringing back the so-called library funds which were cancelled in the fourth quarter last year and brought back in the fourth quarter this year and therefore included in the guidance for 2025, I do believe that we are going to witness further changes of route. My perception is connected to the fact that on the side of publishers, we're under the impression that the impact of the new Carta Cultura was not just negative from the point of view of volume of public resources which relate to the UP18 program, but also the use of these resources went through problems connected with families, that is income situations which prevented access to the smaller resources put available.
If your question is what do I expect as a publisher and what would I ask as an add-on to the EUR 30 million to bookstores between October and November this year, I can tell you that in my opinion the procedure should be simplified and this I really take for granted. We should have available those funds that were not being spent over the past 12 months based on the Carta Cultura program, all this sums up to a publishing program. I'm not just talking about the Italian market, but about the Mondadori group only. This impact should be summed up to the very positive impact expected after publishing the new books which we want to publish after the summer, throughout the year, until the end of the year. These are successful authors. There's no surprise in store.
We think that this can give, as it happens every year, a big push, as it happened, with very strong publishing program, not in terms of Christmas books in 2024, but in 2023. I believe I answered your first question. On the second question concerning media, I give the floor to Alessandro.
Hello, Fabio. Now, we had a quarter which indeed, as far as the media digital business is concerned, had extremely good results that come from a very sturdy dynamic of advertising cash in the MarTech, both in Italy and internationally. As you know, we have started as of last year, the Adgage business and therefore MarTech is from Spain.
When it comes to in particular the display side of the business, that is more traditional advertising inflow, the growth was really very much contained because the only official piece of data on the market is a rather important decline, - 2.6%. In spite of this, we held up and indeed grew, although slightly. The big growth was on the MarTech front. AdKaora and Adgage had meaningful growth and it was rather flat because of the fact that the traditional customer base is being replaced and they had guaranteed a rather sustained dynamics over the past few years. Indeed over the past few months and first months of the year, advertising budget was slow up.
There is a discontinuity in terms of premature coming from the fact that starting from October last year, we started to consolidate Benedetta and therefore we have a positive contribution from Benedetta worth approximately EUR 700,000 in terms of revenue.
Thank you very much, Mr. Alfons. Next question is from Chiara Pampurini from Intermonte.
Hello, good afternoon. Thank you. The first question is on educational business. Do you have preliminary data already available, allowing us to make a short comment in terms of your expectations for the quarters to come on this segment. The second has to do with the 2025 cash flow. Would you please give us more color about that and whether this situation is limited and so the cash conversion can be confirmed at level of 40%, as you said before.
I start from the educational business. We have no information on the campaign.
The campaign is going to be over in a couple of weeks from now and we should begin to have from the data bank or of both the Ministry and Italian society numbers on the campaign in the second part of the month of June, as it happens every year. We are not really seeing on the market because sometimes there is some titles. In actuality, I'm not just talking about the titles in our publishing house, but there's no specific rumors. Teachers are probably more concentrated on the assumptions on changing the curricula for the years to come, which is one of the ongoing campaigns by the Ministry of Education.
I can tell you that based upon March numbers and anticipations in April, also in terms of revenues, this slight delay of revenues at March 31st, which is not really an indication for anything because these are the preliminary deliveries that the educational wholesalers have because they know more or less what they're going to be selling of March revenues in April, becomes a slight advantage, which is not an indication for anything. I'm talking about the delay in March or the anticipated revenues in April. Substantially, when it comes to the educational business, we have no element that changes our own guidance. This is what happens in May since many years now. Sorry, I don't know whether I can switch to the next question. There was another question on the cash flow.
As far as the cash flow dynamics is concerned, we confirm what we said in terms of guidance, an ordinary cash flow in the order of EUR 70 million. We confirm also what we had anticipated, that is, between 2025 and 2026 there is going to be an outpour of cash. When it comes to trade and the sales through physical channel, the cashing in average days are 180, which means that the cash that I take into consideration in a full year are not the physical channel, but are the first semester of the current year. Antonio already explained it in his preliminary comment.
We had a 2024, which was from the publishing standpoint, a very dynamic first six months with a number of supplies commercially available and good and very comforting, and the second semester with weaker results and the market a little weaker also because there was a less attracting supply. 2025 is completely different. That is a first semester which is poorer from the publishing standpoint and the second one very rich. This means that in 2025 the dynamics in terms of cash flow will indeed depend upon the weakness of the second semester of 2024 and 2025 with a positive outflow on 2026 benefiting from the cash flow from sales in 2025, which we expect to make because of the richness of our publishing plan. A dynamics is not really, you know, out of forecasts.
The order of magnitude is EUR 70 million on the two years we're going to have an overall average dynamic of approximately EUR 70 million. There could be a slight outpouring into the following year due to the dynamics I just mentioned. Also an algebraic answer to your question on cash conversion above 40%. If we were below 40%, our cash flow would be EUR 64 million. Approximately we are at about EUR 70 million as Alessandro told you. So we are going to be definitely higher than 40% in terms of cash conversion. Next is Milo Silvestre, Equita Sim.
Good afternoon everyone. I have three questions. The first one is connected to Star Comics commercial campaign that is besides the first quarter do you expect other negative in the other quarters. Second, the trade division, the first quarter is definitely lower than last year.
What are your expectations in terms of catching up in terms of margin at year end and M&A? Would you like to give us an update on the M&A situation? Thank you.
Alessandro will answer you on the M&A. We are going to give you a diplomatic answer, although he will probably say nothing about it. It does not mean that there is nothing on our pipeline, but it is up to him to answer. When it comes to Star Comics, in actuality, Star Comics, when it comes to Marvel trends, is actually, in terms of sellout from GfK, the first Italian publisher in terms of performance out of the first three in 2025 versus 2024.
Up to a week ago there was a sellout with a small positive sign, although the comics segment is a negative one because the other publishers in actuality have a, the commercial performance in terms of sellout by Star Comics is substantially steady. The difference that you see is a difference which is connected to a promotion which we carried out at the beginning of last year by aligning commercial terms and conditions by Star Comics to Mondadori which are more favorable to the publisher than before we controlled Star Comics. Of course you may align to the most favorable conditions. Mondadori only once in your lifetime. When it comes to revenues and not sellout, last year we had this benefit which occurred, if I remember well, very early during the year, during the very first weeks in January.
I see that people here confirm that. The only difference is this phenomenon when it comes to Star Comics revenues, which did not have any impact in terms of sellout. The forecast for the year 2025 for comics anyhow is a gross, but not definitely stronger. It is a yearly forecast which is substantially in line with last year, with a slight minor sign at the moment, because sales trends are good in the comics channel, which is better than the bookstore channel. There is a decline, a single-digit decline when it comes to all comics in all publishers and not just us, - 3 and -4 of the market. Comics are - 3 and -4 and sellout of brand. Star Comics is positive in terms of 1.2.
As far as M&A is concerned, we continue to work with a focus on our two major sectors. From the point of view of inorganic growth, and I refer to books and digital, we have two, three situations which are very good and, of course, the chance of having them positively done depends upon what happens in terms of negotiations between us and the clients, etc. I am moderately optimistic about at least a couple of programs that might have a positive outcome. Very encouraging, given that we are always very prudent, very careful. More than this we cannot say. What about the margin of the trade division? The expectation is to catch up not only in terms of revenues and sellout, but in particular in terms of sellout.
The negative results of the first quarter getting substantially back in line in terms of growing, not only when it comes to revenues, but also margins. What we expect is that through books we can absorb and set off the difference of those contributions which do not properly come from the sales of book. As it happens with the results of the first four months of the year of the concession in Rome, where you speak, would sell services and not books. With books we may be able to offset this differential as well. Talking about books only, we expect to close 2025 above 2024.
Thank you.
For further question, please press star one on your phone.
Dr. Porro, al momento non ci sono further.
this time, we have no other questions booked. There is Mrs. Antonella Frongillo from Intesa Sanpaolo for a follow-up question. Yes, thank you. Just a follow-up. You said that in April you are going slightly better than your expectations. Could you give us more detail? Are we still negative? Would you give us a more accurate indication about April? In actuality, I have not as yet got a final number when it comes to April closing. I just have an estimate. What I can tell you is that if in April, suppose we have filled up the negative number because of the impact of public resources and the concession in Rome, we will close 2026 with a double-digit growth within this trade division. We expect to close.
We expect April still negative because for the four months connected with the progress of resources end in April as well as the concession for Rome, what's new is going to start as of the second semester of 2025. Up to April, April included, you'll see numbers for all books with some issues. The last month that is April is that those who were not spending the EUR 500, they were gonna lose them. The time lag for the old UP18 was a month where the use of those EUR 500 increased February and March even more. April was the month, the top month, the record month. You will see on in terms of general market, April is not a month that increases the trend of the last three months. It's only us at Mondadori who had understood this particular trend in the first four months.
That vis a vis our estimate in the first four months of the year, we wanted to position in terms of net revenues. That was better than what we used to think in order to be able to hit the guidance goals. I do not know whether I was clear enough. If it is not clear, I will give you a different answer through a different process. We are not getting positive and I am talking about both us and the market. We end the last problematic month. Since we had a month by month road up, eventually we find ourselves with negative signs which are not improving in April.
In a slight advantage for me, it is encouraging, and it is encouraging to tell the market as well as our shareholders that some months in advance we expect to have, you know, a sound future without frightening the market or frightening them. Because the book market, which is worth more than 80% of our revenues on March 31st, because between trade publishers and bookstores, 81% of our more than EUR 161 million revenues come from books, which has a negative sign. As much as in the first couple of months of the year, the advertising market in the magazines and digital was negative. Given 100% sales made by three markets with a slight negative sign. We have EUR 1 million differential in terms of revenues versus last year. Looking at us, it does not really look like markets are stepping back.
Dr. Porro, questa.
Mr. Porro, this was the last question. I give you the floor back to draw the conclusions.
Thank you very much indeed to all of you and I will welcome you at the end of July for the next three month call or quarterly call, unless we have some positive surprise to inform you about. Thank you very much indeed and see you soon.
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