edel's (DE:EDLG) H118 results to March showed good top-line progress (+8%) and an uplift in EBITDA margins from 9.3% to 9.8% as digital activities gained in importance. While revenue was marginally behind expectations, an unchanged full-year forecast assumes a stronger H2 than usual, reflecting the good momentum. The investment programme is starting to pay back, with a full year’s impact in FY19e, when forecast margins have edged up. Edel has changed its status to a partnership limited by shares, reflecting the importance of the founding family’s interests (64% shareholding). The shares trade at a substantial discount to global entertainment content and publishing stocks, partly explained by the limited market liquidity.
Feet in the digital and physical camps
Industry figures (IFPI) show revenues from streaming having outstripped those from physical music sales globally in 2017 for the first time. The latter, at $5.2bn, were down 5% year-on-year, while the former were up 41% at $6.6bn. While production of CDs and DVDs is obviously in decline, the resurgence of vinyl continues. optimal media (60% group revenues) is a leading partner to the major music groups in global markets. It has been investing in print and print finishing production, and has further plans to increase capacity in vinyl, where it is a leading global player. Kontor New Media (18% of group revenues in H118) has significant expertise in licensing and content management, and is well placed in music streaming, distributing content on platforms such as iTunes, Amazon (NASDAQ:AMZN) and Spotify.
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