LAGARDERE : Significant increase in first-half net income

At its meeting of September 22, 1999, the Supervisory Board reviewed the financial statements for the six months ended June 30, 1999 presented by Jean-Luc Lagardère, Chief Executive Officer, and Philippe Camus and Arnaud Lagardère, Co-Chief Executive Officers.

Consolidated sales increased by 14.6%

Consolidated sales for the first half of 1999 totaled 5,769 million euros vs. 5,033 million euros for the corresponding period of 1998. This 14.6% increase stems from progress in each of the Group’s business segments: Lagardère Média (+7.9%), High Technology (+34.6%), and Automobile (+6.4%).

Excluding changes in the group structure and exchange rates, consolidated sales increased by 3.5% overall, with increases of 3.9%, 2.1% and 6.4% respectively in the Lagardère Média, High Technology, and Automobile segments.

Operating income amounted to 193 million euros, a decrease of 21.5% from first half 1998.

This is attributable to several factors:

• The Lagardère Média segment recorded operating income of 92 million euros reflecting a 19% increase on first half 1998. Three divisions — Book Publishing, Print Media and Distribution Services — recorded increases in operating income. The contribution of the Digital division (Radio broadcasting, TV production, Thematic channels, Internet and Direct marketing) decreased despite a significant improvement in the radio broadcasting sector. This was due to the elimination of Giraudy’s positive contribution (this subsidiary has been disposed of and is not consolidated in first half 1999) and to the significant investments made to pursue the rapid development of activities associated with the Internet.
• The High Technology segment, now represented by Lagardère’s 33% holding in Aerospatiale Matra, contributed operating income of 42 million euros compared with 141 million euros in first half 1998. In the Aerospace division, the contribution of Airbus activities to operating income rose significantly, while the Helicopters division reduced operating losses recorded in first half 1998. The sharp reduction in the Missile division’s contribution was, as announced earlier, the direct outcome of the fact that major export contracts in the Defense segment had reached full completion at the end of 1998.
• The Automobile sector, in which operating income totaled 40 million euros was up 11%, thanks to the ongoing success of the Renault-Espace minivans.

The table below summarizes key figures from the consolidated statement of income.

Significant increase in net income: + 43%

Current income totaled 198 million euros, after including net interest income of 5 million euros.

Consolidated net income for the period includes non-operating income of 73 million euros and income taxes of 69 million euros.

Non-operating income includes, principally, the capital gains realized on the sale of Giraudy and Skyrock and costs incurred by Aerospatiale Matra as a result of operations related to the merger with Matra Hautes Technologies, Aerospatiale’s privatization & Aerospatiale-Matra’s I.P.O.

In addition, the losses recorded by Aerospatiale as a result of the restructuring of its foreign currency hedging positions (401 million euros) and the gain recorded on the sale of its equity stake in Sextant Avionique (182 million euros) were anticipated and consequently charged directly to shareholders’ equity on January 1, 1999. These two items therefore had no effect on Lagardère’s consolidated results.

Net income, after deducting minority interests, totaled 119 million euros, a 43% rise on the corresponding period of 1998.

Earnings forecast for 1999 confirmed

As announced earlier, results for the full year 1999 should be lower than 1998 results, which included income from the full completion of long-term export contracts in the Defense sector.