26th Jun 2008 07:00
United Business Media plc provides Trading Update for the First Half of 2008
On track to deliver another good year
United Business Media today announces that consistent with the Interim Management Statement made on 9 May 2008, it expects its results for the first half of 2008 to be modestly ahead of market expectations. United Business Media will report results for the first half of 2008 on 29 July.
Despite the volatility of markets worldwide, UBM's products and services in the B2B markets we have chosen to operate in have, to date, generally proven resilient. However in the current uncertain macro-economic environment four key issues have given concern to certain of our investors, these issues being: the cyclicality of UBM's technology media markets, the turnaround of CMPMedica, the cyclicality of UBM's events, and the slowdown in advertising expenditure.
Good performance by UBM's technology businesses
In February 2008 UBM separated its former technology division into four smaller, more agile businesses (TechWeb, Think Services, TechInsights and Everything Channel), giving each new business the independence to focus on meeting the specific needs of the professional communities it serves. This strategy shows early signs of success. TechWeb and Think Services have well-balanced product portfolios and are achieving some excellent performances from their key events, such as Interop, Black Hat, Web 2.0, Voicecon, Game Developer Conference and Help Desk Institute. Furthermore, their digital businesses are now achieving their growth milestones. TechInsights and Everything Channel require additional products and services to achieve more balanced portfolios. We have started to address this through the recent acquisitions of Semiconductor Insights, Portelligent, Vision Events and Next Level. First half revenue and profits across these four businesses will be ahead of last year.
Turnaround at CMP Medica on track
The significant changes made within CMPMedica are having their planned impact. The changes made at senior management level have strengthened the business, IT support has been streamlined and the product portfolio has been improved, with strong growth in digital revenue and a better performance in exhibitions. Revenue and profit in the first half will be ahead of 2007.
Strong performance from key events
Despite the long track record of success of UBM's key events, there remain some investor concerns that these events may display cyclicality. However the 2008 performance of these events has been in line with, or ahead of, our expectations.
The key global events that have already been held this year have achieved good growth. These events include the June edition of the Hong Kong Jewellery and Watch Show, IFSEC (UK), Medec (France), Game Developer Conference (USA) and Interop (Las Vegas). Those major events scheduled for the rest of 2008 such as CPhI Worldwide - our largest event by revenue - CPhI China, CPhI India, Interop (New York), Web 2.0 Expo (USA), the September edition of the Hong Kong Jewellery and Watch Show and Furniture China (our largest event by exhibitor space) are expected to deliver good performances. Furthermore, forward bookings for 2009 from the key events that have already taken place in 2008 are showing good growth, in line with our expectations.
Advertising performance will continue to be mixed
We expect to see cutbacks in certain areas of advertising during 2008 and, most likely, into 2009. However we do not believe that all areas of advertising will experience declines. We have been encouraged by the performance of the InformationWeek Business Technology Network (InformationWeek's integrated media product portfolio) whose revenue is ahead of last year, as well as by the InformationWeek magazine which has gained market share. Certain other publications have also performed well, such as Pulse and Farmers' Guardian. We expect a level of decline in certain classified markets, for example recruitment in the UK, which does not represent a significant part of UBM's revenues. Overall, however, our advertising-related products are increasing market share.
Elsewhere in UBM's businesses, we also expect to see cut backs in discretionary conference expenditure, affecting products such as our UK sustainability conference `Think'. As noted in our May interim management statement, we have also experienced weakness in some of our Japanese markets.
Summary of B2B communities
Through acquisitions, disposals, and investment, we have successfully repositioned and rebalanced our B2B community businesses. These businesses are now more resilient and have good growth characteristics. In addition to the businesses highlighted above, CMP Asia and CMP Information derive around 90% and 60% of their revenues from events respectively. Furthermore, those businesses which we have added to UBM, such as Commonwealth (trade and transport) and RISI (pulp and paper) largely provide data-based workflow solutions. These businesses have been, and are expected to continue to be, resilient.
B2B News Distribution, Monitoring and Targeting
In the USA PR Newswire's management is implementing substantial projects to streamline the number of its editorial and sales operations from twenty to three bureaux, to upgrade its customer support IT systems and to enhance its online services capability. These projects have continued to prove challenging. As noted previously, although PR Newswire is increasing its customer base, it has lost a number of high spending customers, which has resulted in lower volume and a loss of market share in North America. In response, we have made a number of management changes and are accelerating certain projects to provide improved services to customers.
We continue to see the markets for News Distribution, Monitoring and Targeting as attractive and growing and as a consequence have increased our investment into emerging markets, in particular expanding PR Newswire's presence in Brazil, Dubai, India, Mexico and the Middle East. Although revenue will be ahead of last year in the first half, profit will be lower.
Acquisitions and balance sheet
Our balance sheet remains strong and we are generating good cash flow. We have seen the price of public companies fall in recent months and we are now starting to see the price of private companies fall. As conditions in credit and other financial markets worsen, we believe that we are strongly positioned to make selective acquisitions whilst retaining our financial discipline.
Nil premium merger with Informa
The board of UBM announced on 17 June 2008 that it was no longer in negotiation with Informa. The board believes that a nil premium merger could have created significant value for both sets of shareholders. Given our strong balance sheet, UBM has a number of routes to create value for our shareholders.
Overall UBM is on track to deliver another good year.
- Ends -
Conference call
A conference call for analysts and investors will be held at 9.30am today.
Dial-in details:
Participant dial-in: +44 (0)20 8609 0205, UK Freephone Number: 0800 358 2705
PIN Code: 693881#
Replay facility:
A replay facility will be available for seven days after the conference call.
Replay facility number: +44 (0)20 8609 0289, UK Freephone Number: 0800 358 2189, Conference reference: 216365#
ContactsMedia Peter Bancroft Director of Communications E-mail [email protected] Direct telephone +44 20 7921 5961 Chris Barrie Citigate Dewe Rogerson E-mail [email protected] Direct telephone +44 20 7282 2943 Mobile +44 796 872 72 89 Analysts/Investors Email [email protected] Direct telephone +44 20 7921 5095 Nigel Wilson +44 20 7921 5019 Andrew Crow +44 20 7921 5940 Notes to Editors
About United Business Media plc
United Business Media Plc is a leading global business media company. We inform markets and bring the world's buyers and sellers together at events, online, in print, and with the information they need to do business successfully. We focus on serving professional commercial communities, from doctors to game developers, from journalists to jewellery traders, from farmers to pharmacists around the world. Our 5,000 staff in more than 30 countries are organised into specialist teams that serve these communities, helping them to do business and their markets to work effectively and efficiently.
For more information, go to www.unitedbusinessmedia.com.
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