espresso:
Another Very Strong Quarter for Cash Generation
3Q10 profitability and cash generation better than expected. 3Q10 revenues stood at Eu194.4mn, +1.3% YoY and slightly ahead of our Eu190mn estimate. Our forecast was surpassed thanks to both slightly better advertising (up 5.9% YoY in 3Q10 or around 3% YoY organic, net of “Reti e Radio”) and higher add-on sales. EBITDA after extraordinary items was Eu29mn, 13% above our Eu26mn estimate and up 32% organically. This, coupled with lower D&A and financials, led to a better bottom line as well: Eu7.7mn vs. Eu3mn expected. The net financial position was also much better then expected, at Eu132mn, vs. our Eu161mn forecast and down from Eu184mn in 1H10. Advertising grew 5.9% YoY in 3Q to Eu104.4mn vs. our 4.8% YoY expectation, including “Reti e Radio”, net of which growth would have been about 3% YoY. This is better than the 1.8% organic growth posted in 2Q, despite a tougher YoY comparison. By medium, YoY advertising growth in 9M10 came from Internet (+21.6%) and Radio (+13.6%), while the press remained negative (-1.8%). In 4Q10 we expect the growth to subside to around 1.5% reported, as 4Q09 was the best quarter in 2009, so the comparison will be very tough. Circulation was still down by a low single-digit amount (-3.9% YoY), actually a steeper decrease than in 1H10. Finally, add-on sales declined 20% YoY, slightly less than expected