French media and telecom conglomerate Vivendi on Tuesday reported lower fourth-quarter earnings amid weaker results at pay TV arm Canal Plus, higher expenses and restructuring and impairment charges on acquired businesses and a slight profit improvement at Universal Music Group.
The Universal Music Group posted 525 million euros ($693.8 million) in earnings before interest, taxis and amortization on sales of 4.54 billion euros ($6 billion), for the year ended Dec. 31, 2012. That is an improvement on the 507 million Euros UMG garnered in the prior fiscal year when revenues were 4.2 billion Euros.
For the fourth quarter, UMG's EBITA was 287 million euros on 1.64 billion euros, representing a 9.1% increase from 2011's fourth quarter performance of 263 million euros. Sales were up 21.1% from 1.36 billion euros in garnered in the prior period.
The company attributed the increase in UMG's annual sales to growth in the United States and favorable currency movements. It also reported that digital sales represented 44% of recorded music sales compared to 38% in the prior year.
Even though UMG completed its acquisition of EMI at the end of September, EMI's financial results from the last three months of the year are not included in Vivendi's numbers, according to its press release on the results.
But Vivendi did say that, thanks to annual savings of £100 million and the sale of Parlaphone, the EMI acquisition will come at a multiple of less than 5X EBITDA, down from the 7X multiple it said it paid when it first completed the acquisition.
For the full year, parent Vivendi posted 2.55 billion euros in adjusted net income on revenues of nearly 29 billion euros.
Excluding various items, Vivendi recorded quarterly adjusted earnings of $465 million (€356 million), down 17.8%. Revenue rose 5.9% to $10.73 billion (€8.24 billion) though.
Including various items, Vivendi's full-year loss amounted to $7.89 billion, compared to a profit of $1.94 billion in 2011. "This change mainly reflected the recognition in 2012 of the reserve accrual regarding the Liberty Media Corp. litigation (€945 million), the impairment of our stake in [telecom firm] SFR (€5.875 billion), and the impairment of the Canal+ Group stake (€310 million)," the company said.
“Despite a challenging economic environment, all Vivendi subsidiaries reached their outlook in 2012," said CEO Jean-Francois Dubos. "Faced with new market conditions and intense competition, some subsidiaries also reorganized their operations and put in place cost reduction programs."
He didn't immediately provide an update on the company's review of its current assets, with observers having suggested a sale of Brazilian broadband unit GVT or Vivendi's 53% stake in Maroc Telecom could be the initial focus.
"Our ongoing strategic review will define precisely, and as and when appropriate, the right paths to increase the group’s overall value and to best serve shareholder interests," Dubos said. But he also once again emphasized "Vivendi’s desire to strengthen its positions in media and content where Vivendi has all the assets needed to assert itself as a European-born, global leader."
Vivendi on Tuesday also announced a dividend of $1.3 (€1) per share.