French multimedia conglomerate Lagardere on Thursday reported a 12.5% fall in first-quarter revenue on a like-for-like basis as coronavirus-related travel restrictions and border closures hit its travel retail business.
The publishing, travel retail, and media group reported first-quarter revenue of 1.36 billion euros, with travel retail revenue falling 18.0% to 804 million euros and the Asia-Pacific region hardest-hit.
It said it expected revenue from the travel retail division, which operates travel essentials, fashion, duty-free, and foodservice stores worldwide, to be down 90% during April compared to the same month a year ago, and operations to remain severely disrupted for the rest of the year.
"We have experienced other crises that have hit air traffic before," said the group's chief executive Arnaud Lagardere in a conference call. "I continue to believe strongly that travel retail has huge growth potential in the years to come."
Lagardere estimated the full-year hit to the travel retail business' recurring earnings before interest and taxes (EBIT)could be in the region of 20% to 25% of the fall in its revenue.
"We remain fully committed to managing our activities throughout this crisis as best we can," the CEO added.
Revenues at Lagardere's publishing division, which accounts for more than half of the company's core profit, fell 3.3% mainly due to closures of sales outlets in France, but this was offset by growth in the United States, which saw a rise in audiobook downloads, and the success of Andrzej Sapkowski’s The Witcher series.
With the exception of travel retail, the group predicted a gradual return to last year's business levels from the second half of 2020.
Lagardere did not comment on next week's annual shareholders' meeting, where activist fund Amber Capital, the group's largest shareholder, is seeking to replace the conglomerate's supervisory board.
Lagardere has ruled out business synergies, or cost savings, with French media group Vivendi, which announced its acquisition of a 10.6% stake in the company last week.
It also said it had reached an agreement with its banking syndicate, which had granted a 1.25 billion euro renewable credit line to waive the covenant for June and December 2020 and consolidate its liquidity.