Vivendi Posts Mixed End to 2022

Vivendi VIVHY reported mixed second-half results with revenue below and adjusted EBITDA ahead of FactSet consensus expectations. Havas and Gameloft posted strong organic revenue growth in the second half and across 2022. The firm deconsolidated Editis as it awaits approval to spin out the publishing division to complete its purchase of Lagardere Group. Management expects the transaction, if approved, to occur in the second half of the year and disclosed that there are three solid offers for the 29% owned by the Bollore family. We are raising our fair value estimate to EUR 12 per share from EUR 11.50 due to projecting slightly faster margin expansion.

Revenue for the fourth quarter came in at EUR 2.7 billion, up 6% organically. Canal+ saw overall revenue improve 4% in the fourth quarter with growth driven by international TV. The segment added 1.8 million subscribers in 2022 to reach over 25.5 million. While the international business continues to expand faster, the domestic French business added over 450,000 subscribers to reach 9.5 million. On the international side, Africa hit 7.6 million subscribers and now makes up 47.8% of the 15.9 million international subscribers versus 46.7% a year ago. Due to the spinout of Universal Music Group in 2021, Canal+ is now the largest and most important segment within Vivendi, generating 61% of 2022 revenue and 84% of 2022 EBITDA from controlled businesses.

Net revenue at Havas was up 7% organically for 2022 with growth across all four regions. For the year, North America improved 5%, Europe by 8%, Asia by 6%, and Latin America by 14%. Havas made eight major acquisitions during the year, expanding its presence in the U.K., China, Australia, and Europe excluding France. Management did not provide specific organic growth for Havas, but stated its peers’ targets of 2%-5% are an appropriate range. Given its heavy exposure to North America and continental Europe, we expect the firm to come in at the lower end of the range.