“Since we reported UBM’s Interim results in July, trading has been in line with our expectations. We anticipate that UBM’s full year earnings for 2009 will be in line with market expectations. These trading and outlook statements are based on trading up to the end of October 2009, together with management’s current expectations for the remainder of the year.
Underlying UBM’s resilient aggregate trading is considerable variation in performance across our individual products, across the range of professional and commercial communities our businesses serve, and across the geographies in which we operate.
Whilst we expect the detailed trading patterns noted below to be maintained, the overall trading outlook for UBM’s businesses remains stable, with no indications of either further deterioration or of improvement. Our businesses in Asia - with the exception of Japan - are showing good growth and are performing in line with, or ahead of, our expectations, as are our businesses in Latin America. Our businesses in continental Europe are generally trading in line with our expectations. As noted in our July statement, our US businesses, particularly those serving the technology and trade sectors, continue to be affected by the challenging recessionary environment. Our UK businesses, notably those in property and construction-related markets, also continue to face tough trading conditions.
We continue to manage our businesses actively through current trading conditions; our business planning is based on the assumption that these conditions will continue in 2010.
B2B Communities
Events
In aggregate our events portfolio (which contributes around half of UBM’s earnings) is performing well. Our largest exhibitor-paid annual tradeshows taking place during the second half in Asia (e.g. Hong Kong Jewellery & Gem Fair, Furniture China) and in Europe (e.g. CPhI Worldwide) have traded in line or somewhat ahead of previously indicated expectations. We also anticipate strong performances from our forthcoming major biennial tradeshows Food Ingredients Europe and Marintec China.
The softness in attendee-paid event revenues (which in 2008 represented around 10% of overall events revenues) that we noted in our May and July updates has persisted as result of continued pressure on corporate travel and conference expenditure.
We anticipate that forward booking of exhibitor revenues for our 2010 events will reflect the broad patterns noted earlier in the year: growth at our Asian and European exhibitor-paid tradeshows (which take place predominantly in the second half of the year) offsetting softer results at our UK property-related and US attendee-led technology tradeshows (which run mostly during the first half of the year). A full update on forward bookings for our events portfolio will be provided at our Preliminary results in March 2010.
Data, Services and Online
Trading across our data, services and online businesses has been mixed. After experiencing poor trading conditions during the first half of the year we have seen some improvement in our intellectual property service products for the semiconductor industry. However we have also experienced weakness in other sectors such as trade and transportation and in aviation. Our major drug information system subscription product Vidal has performed in line with our expectations. The two acquisitions made during the summer – Iasist (an Iberian medical data business) and the remaining equity in RISI (our global forestry and paper products data business) – have both traded satisfactorily.
Online advertising revenues have yet to show any improvement in the aggregate. There is continued pressure on banner advertising models in general but, by contrast, we see rising demand from marketers for products – such as lead generation products - which can provide clear empirical evidence of their return on investment. We also see growth in single sponsor-branded, rich content ‘engagement’ products such as Internet Evolution (see www.internetevolution.com), an experimental B2B social network site focusing on the future of the internet which recently won three major ‘Best of the Web’ awards: Digital Team of the Year, Best Community / Social Networking Site, and Best B2B Magazine-Branded Video.
The combination of difficult economic conditions and long term structural decline continues to reduce print revenues. However our controlled circulation print magazines remain in strong demand from the communities they serve and the registration data derived from subscribers represent an important resource for our non-print businesses, providing them with a significant competitive advantage over their ‘internet only’ competitors. We also have a range of initiatives in progress across our businesses to monetise content that was previously available at no cost to qualified readers. We believe that in the medium term many (but not all) of the markets our businesses serve will continue to support a small number of print titles. These titles are likely to be complementary components of an integrated product portfolio. In anticipation of this market trend, we are managing our portfolio towards a smaller set of market-leading, commercially sustainable titles, each operating within an integrated product portfolio.
Targeting, Distribution & Monitoring
Overall, trading in UBM’s Targeting, Distribution & Monitoring businesses remains soft, although we expect operating profit margins to remain consistent with our first half results. As noted in the updates made earlier in the year, the Targeting, Distribution & Monitoring businesses have been affected by poor economic conditions, lower aggregate levels of corporate and market activity and the associated general reduction in marketing and communications spend.
Although we continue to maintain market share, we have experienced lower overall message volumes in the US news distribution market which contributes around half of our Targeting, Distribution & Monitoring revenues. These lower message volumes reflect generally lower levels of commercial activity, affecting all major message categories including new product announcements, personnel changes and contract wins. A similar trading pattern is evident in the Canadian market. Tighter corporate spending across all areas of expenditure has also had some impact on sales in MultiVu and in other non-wire targeting and monitoring products. However the use of Multimedia News Releases, a market in which we have a significant presence, continues to grow well.
Outside North America, our business in the UK and Europe has faced challenging trading conditions. However our businesses in India and China continue to demonstrate good growth.
Acquisitions
In 2009 to date we have invested a total of £20m in four acquisitions. We continue to seek high quality acquisition opportunities which offer the potential for UBM businesses to add value. The focus of our acquisition efforts remains on tradeshows and IP-based data and service businesses, and on opportunities in emerging markets, particularly in China, India and Brazil. We anticipate that the flow of acquisition opportunities will improve over the next year.
Foreign Exchange
In 2009 UBM expects that approximately 60% of revenues and operating profits will be denominated in US dollars, and that approximately 20% of revenue and 25% of operating profits will be denominated in Euros. For H1 2009, the principal average exchange rates used were £1: $1.50 and £1: €1.12. The average exchange rates for the full year 2009, assuming no change to current rates over the remainder of the year, are expected to be £1: $1.60 and £1: €1.10.
For 2010 we estimate that a one cent change in the US dollar exchange rate would change revenues by £2.9m - £3.1m and operating profits by £500,000 to £600,000. A one cent change in the Euro exchange rate would change revenues by £1.2m - £1.4m and operating profits by £300,000 - £400,000.
Next trading update
United Business Media will announce Preliminary results for the twelve months to 31 December 2009 on 5 March 2010.”
About United Business Media Limited
UBM says: “UBM focuses on two principal activities: worldwide information distribution, targeting and monitoring; and, the development and monetisation of B2B communities and markets. UBM’s businesses inform markets and serve professional commercial communities - from doctors to game developers, from journalists to jewellery traders, from farmers to pharmacists - with integrated events, online, print and business information products. Our 6,500 staff in more than 30 countries are organised into specialist teams that serve these communities, bringing buyers and sellers together, helping them to do business and their markets to work effectively and efficiently.”
