Chrysler 2002 Annual Report Download - page 62

Operating performance
In 2002, sales of Italian newspapers averaged about 5.9 million
copies a day, or 2.8% less than in 2001.
Demand for print advertising was also down, contracting for
the second consecutive year. The decline experienced in 2002
affected all segments of the market and was steeper (-7.1%)
than in 2001 (-2.9%).
Editrice La Stampa S.p.A. reported an average daily circulation
of 384,000 copies in 2002, down from 406,000 copies in 2001.
The price increases of December 2001 and March 2002, coupled
with a more selective distribution strategy focused on paring
back circulation in marginally profitable areas, account for this
decrease. The impact of these negative factors was offset in
part by the launch of Milan and Rome editions in May 2002.
During the course of the year, the Sector implemented several
“brand stretching” initiatives, using the
La Stampa brand to
market, through the newsstand channel, such high-quality
products as a Universal Atlas and the Flavors of the World
guides. At the end of 2002, the Sector launched a major
overhaul of its local editions in the Piedmont, Liguria and
Valle d’Aosta Regions and of its
Specchio magazine.
Revenues from the sale of newspapers and other publishing
products totaled 75 million euros in 2002, or 3.2 million euros
more than in 2001. Advertising revenues amounted to 98 million
euros (about 8.3% less than in 2001), accounting for 58%
of Editrice La Stampa’s total revenues.
In 2002, Publikompass S.p.A. booked advertising billings in
excess of 286 million euros, for a gain of 3% over the previous
year. This improvement was made possible by the signing of
new licensing contracts, which enabled Publikompass to buck
the negative trend that prevailed in the Italian advertising
market, where demand fell by 3.5%.
The sales results achieved in 2002 varied according to
the business segments where Publikompass operates.
Newspaper advertising was up 0.4%. However, on a comparable
basis, billings were down 4.4% compared with 2001, which
represents a smaller decrease than the market’s overall decline
(-6.6%).
Periodicals posted a gain of 9.2% in absolute terms, but a
decrease of 6.5% on a comparable basis. In this case as well,
the market contracted by a larger percentage (-7.9%).
Billings from radio and television advertising grew by 37.3%
(-4.3% on a comparable basis).
Results for the year
Itedi posted net revenues of 360 million euros in 2002.
Notwithstanding a slump in the advertising market, the increase
from the 347 million euros reported the previous year was
made possible thanks to new advertising licensing contracts,
newspaper price increases and “brand stretching” initiatives.
Operating income grew to 3 million euros, compared with an
operating loss of 2 million euros in 2001. This improvement was
made possible by the abovementioned increase in the
newspaper’s price, the implementation of programs designed to
increase efficiency and optimize costs in all areas of the Sector’s
organization and by the successful renegotiation of supply
contracts. These programs enabled Editrice La Stampa to cut
costs by about 18 million euros. On a comparable basis, this
amount is equal to about 10% of the total costs incurred in 2001.
Depreciation and amortization increased to 8 million euros
(7 million euros in 2001).
The year ended with a net loss of 5 million euros, compared
with a net loss of 6 million euros in 2001. Writedowns of equity
investments, taken to recognize losses incurred in 2002 by some
of the Sector’s associated companies, and a heavy tax burden
(the local tax on production activities, or IRAP, in particular) are
the main reasons for the loss.
Cash flow improved to 3 million euros, or about 2 million euros
more than in 2001.
60 Report on Operations
Publishing and Communications — Itedi
(in millions of euros) 2002 2001 2000
Net revenues 360 347 354
Operating result 3(2) 10
EBIT 1(4) 10
Net result before minority interest (5)(6) 2
Cash flow 318
Capital expenditures 3617
Net invested capital 40 49 46
Number of employees 923 934 954
Highlights
Revenues by business unit
050% 100%
Newspaper publishing Advertising