Agora - 2Q09 results preview, due to 13 August

Agora (18,6 PLN, 0,00%) is scheduled to publish 2Q09 results on 13 August before market opening. In the middle of the major recession on the ad market and very poor situation in the press market in particular the numbers should not be inspiring however the sings of cost restructuring should be already clearly visible. We forecast net profit in the seasonally strong 2Q09 to come in at PLN 12.9m, down 40% y/y. Our estimate is more than 50% above the consensus forecast of PLN 8.4m (according to PAP). We believe the market focus should be on the management outlook regarding some signs of stabilization on the market in 2H09.

Revenues are expected to come in at PLN 294.7m in 2Q09, which is in line with consensus estimate.
• Advertising revenues should fall by 23.3% y/y to PLN 199.1m in 2Q09. We forecast ad revenues related to Gazeta Wyborcza to fall 37% y/y, again exceeding rate of the decrease of the market due to exposure to the most cyclical segments. The second most hurt segment should be magazines where we expect detraction of ad sales by 19% y/y. All other segments except for internet should also be down at a rate around 10% y/y. Internet ad revenues should be up some 30% y/y but mostly due to consolidation of Trader.com absent in the base period.

• Sale of publishings should be down only 2.3% y/y to PLN 48.2m. Some 8% y/y fall of circulation of Gazeta Wyborcza should be offset by some 9% y/y increase in the effective price per copy as a result of two cover price increases. We also forecast 14% y/y fall in the circulation of magazines.

• Revenues from collections should skyrocket in the period to PLN 28.0m due to low base effect but also due to successful revitalization of this business line.

EBIT is expected to come in at PLN 15.7m in 2Q09, down 48% y/y due to weak revenues and high operating leverage in the company. Our forecast assumes significant progress in the cost restructuring which has allowed the company to stay in the black territory. Staff costs should be come in at PLN 70.0m for 2Q09 down 11% y/y and also 2.9% q/q. Even larger progress has been made in our view in promotion and marketing expenses which we forecast to fall 31.5% y/y. Our EBIT estimate is above consensus forecast of PLN 10.0m.