Publigroupe sells Publicitas

The trend towards electronic media and away from traditional print media is also having an impact on the advertising market. The Vaud-based advertising company Publigroupe is divesting itself of its historic core business, the newspaper advertising business. It is selling its subsidiary Publicitas to the German investment company Aurelius. With this sale, Publigroupe is pulling the emergency brake after the loss-making and uncertain course of recent years. The slump in newspaper advertising had repeatedly led to high losses in recent months and years. Last year alone, the corresponding Media Sales division posted an operating loss of CHF 14.5 million. This also dragged the overall result into the red: Publigroupe recorded a bottom-line loss of CHF 5.9 million last year. The
Sales revenue from the traditional advertising business has fallen continuously in recent years, by 10 percent in 2013. In 2012 and 2011, sales in Publigroupe's previous core business shrank by 13 percent each. This also reduced the importance of the advertising business for Publigroupe. Nevertheless, this business area still accounts for a substantial share of total sales.

With the sale of Publicitas, Publigroupe is also drastically downsizing: in 2013, the company still posted net sales of CHF 267 million. For 2014, Publigroupe is still planning net sales of around 150 million francs, excluding the results of Publicitas. To achieve this, profitability is to be increased. The operating profit should reach around 20 million francs. In 2013, this was only just in positive territory across the Group.

Focus on the digital advertising market

Publigroupe CEO Arndt Groth described the sale at a media conference on Wednesday as "the consistent implementation of our strategy focused on business in the areas of digital advertising sales and electronic processing". "With the sale, we have almost completed this transformation into a digital company", said Groth. Once the sale has been completed, Publigroupe will generate 80 percent of its turnover with digital products and services. Publigroupe holds a 50 and 47.5 percent stake in the Local.ch and Zanox platforms respectively. And Group CEO Groth sees further growth potential: "Publigroupe is perfectly positioned to further expand its role in the digital advertising market in the future," he said on Wednesday. According to Groth, the trend towards digitalization in the media market is irreversible.

Publigroupe receives "low double-digit million amount"

Publigroupe is selling its subsidiary Publicitas, which was founded 124 years ago, for a "low double-digit million franc amount", said Hans-Peter Rohner, Chairman of the Board of Directors of Publigroupe. The corresponding contracts were signed on Tuesday evening (yesterday). However, the competition authorities and Publigroupe shareholders still have to approve the sale. "We need a two-thirds majority at the Annual General Meeting," said Rohner. If the sale goes through, Aurelius will take over all 860 Publicitas employees. "Not a single employee will lose their job as a result of this transaction", said Rohner. When asked whether there could be redundancies after the sale of Publicitas, Donatus Albrecht from the future owner company Aurelius was unable to provide an answer. "We are not yet the owner. We can't answer these questions today," Albrecht told the media.

Publicitas continues to operate in the print sector

However, it is clear that not only Publigroupe but also Publicitas will have to make some changes to get back on the road to success. The new strategy has already been outlined by Alain Bandle, who has been CEO of Publicitas since last year and will remain so under the new owners. "We will continue to be active in the print sector," Bandle told the media. "But as this market is declining, we need to enrich our portfolio." He referred, for example, to the advertising business for television and radio. "As a third component, we need to reduce our cost base," said Bandle. The new Publicitas CEO had already announced last summer that he wanted to put the company back on the road to success by fully automating the marketing of advertising space.

"Significant cost savings at Publicitas"

The head of Aurelius, Dirk Markus, sees significant cost savings for Publicitas - in the IT area, but also in terms of personnel in particular. He could not yet say exactly what this would mean for the number of employees. "It's still too early for that," said Markus during a conference call on Wednesday afternoon. However, cost savings do not necessarily mean job cuts. He sees a lot of potential in the outdated IT platforms. Aurelius will make significant investments in order to merge the various current systems. "The customer should be able to serve all channels with one system using automated online booking platforms and thus become significantly more efficient," said Markus, who also studied business administration at the University of St. Gallen. Aurelius will pay particular attention to the rapidly growing digital and mobile market. In some businesses, Publicitas had adopted a certain "dismissive attitude" and focused strictly on the print market.

Today, the digital area at Publicitas is much smaller than print. "But digital advertising marketing is growing and catching up," said Markus. Print will be retained, as he does not believe that print products will die out. "But in future, people will read advertising in print and online. It shouldn't matter to us where we place advertising in the future," said Dirk Markus. The company has also failed to adapt its complex organizational and fixed cost structure. For example, there is no precise analysis of profitability per sales agent or regional office. Even if the strategy does not yet appear to be fully developed, it is clear that Switzerland will be retained. "The home market will always remain Switzerland," the business economist made clear. In addition, the advertising marketer should already be back in the black operationally in the current financial year. (SDA)