Outlook

RTL Group is reverting back to guidance on EBITA in its outlook statement. The Group believes this will provide a better operational KPI than continuing to use EBITDA. The Group notes that the analyst community continues to use EBITA – some on an exclusive basis – as the main KPI for the Group’s profitability. Reverting back to EBITA will therefore align the Group’s guidance to the expectations of the investment community. In addition, the Groups EBITDA will be affected by the new IFRS 16 (Leases) standard from 2019 onwards. Both EBITDA and EBITA will continue to be reported on for the Group’s business segments. As outlook guidance will revert back to EBITA, RTL Group will also comment primarily on EBITA as the KPI for operating profit in 2019.

Revenue

Given the current economic climate RTL Group expects 2019 to be another challenging year for TV advertising. Accordingly, RTL Group plans on an overall stable, to slightly down, growth for the Group’s TV businesses.

Fremantle, the Group’s content division, will continue to benefit from the drama pipeline which contains a number of new and second season commissions.

Accordingly, RTL Group expects Fremantle’s organic revenue to grow between 4 and 7 per cent with EBITA once again progressing. For the sake of clarity, this revenue guidance excludes any impact from foreign exchange movements.

The Group’s digital revenues are expected to continue to show revenue growth of around 10 per cent in 2019.

In summary, RTL Group expects its total revenue for the fiscal year 2019 to grow moderately (+2.5 per cent to +5.0 per cent) excluding foreign exchange rate effects, driven by the Group’s digital businesses and Fremantle.

Leverage ratio, cash conversion, dividend

RTL Group will continue to target a leverage ratio of between 0.5 and 1.0 times net debt to full-year EBITDA for the fiscal year 2019.

The company will continue to focus on EBITA cash conversion, and targets levels not below 85 to 90 per cent. Given the Group’s low leverage at the start of 2019 and modest M&A intentions the Group will maintain its current dividend policy and expects the payout for 2019 to be in line with prior years.

EBITA

In terms of profitability, as measured in EBITA, RTL Group believes it will be able to deliver another good year in 2019, despite the investments in programming and the launch of our new direct-to-consumer businesses.

Our broadcasters will continue to invest in their TV schedules. In Germany, Mediengruppe RTL Deutschland will air ten football matches of the German national team this year – eight qualifying games and two friendlies (2018: total of two matches). This will come with a certain cost and will weigh on EBITA. In addition, the Group will accelerate its investments in its VOD activities and these are expected to impact EBITA negatively.

In terms of upsides the Group expects the absolute amount of Fremantle’s EBITA to be higher again in 2019, on the back of the drama successes and lower development costs. The EBITA from our digital activities, even with some potential restructuring at the level of StyleHaul, is also expected to improve, reflecting lower overall losses at the MPNs and higher profits in the Group’s ad tech activities.

Overall RTL Group currently expects the Group’s EBITA for 2019 to be moderately down i.e. to be within a range of 1.13 and 1.16 billion Euros compared to 2018.

Outlook RTL Group

In million €

2018

2019e

Outlook

% change

Revenue

6,505

6,668 to 6,830

Moderately up (excluding FX effects)

+2.5 to +5.0

EBITA

1,171

1,130 to 1,159

Moderately down

-2.5 to -5.0

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