CME: Key takeaways from the conference call

CME (199 CZK, 0,10%): Key takeaways from the conference call CME’s management held a conference call for analysts yesterday. The key takeaways were as follows:

• The company presented financial guidance for revenues at US$ 850m and OIBDA at US$ 166m in full-year 2011. The guidance assumes constant FX rates from 26 October 2011. The guidance is 1% above the current Bloomberg consensus on revenues and 2% above the consensus on OIBDA.

• CME anticipates 2% y/y aggregated growth of the TV ad market across all territories in 4Q11. At the same time, the firm recorded average TV ad market growth of 0.7% y/y in 3Q11, mostly driven by 7% y/y growth in Czech Republic, 5% y/y growth in Slovenia and 2% y/y growth in both Croatia and Bulgaria. On the other hand, the TV ad market in Romania recorded an 8% y/y decline while Slovakia recorded a 4% y/y decline in 3Q11.

• After the successful integration of Bonton, CME expects the thirdparty revenues of Media Pro Entertainment (MPE) to reach 40% of the division’s total revenues in full year. MPE is on track to reach the company’s target of positive OIBDA in full-year 2011.

• CME completed the roll-out of Voyo, an internet platform in all territories, in 3Q11, which improved non-advertising revenues in the New Media segment.

• The company is on target to deliver positive free cash flow for 2011.

• CME is willing to extend the maturity profile of debt in a cost efficient manner and is focused on deleveraging. The firm is looking for opportunities to repurchase its debt when this becomes attractive for the company.

• The company expects the operating environment to remain challenging going forward. The firm will continue to focus on deleveraging, financial discipline and diversification of revenues. Organic growth will remain the company’s top priority in 2012.

Our view:
The conference call was held during yesterday’s trading session. The presented financial guidance was roughly in line with market expectations and did not surprise investors. We expect a neutral market reaction to the news today.