Lagardere to Take 2011 Impairment Loss as Fourth-Quarter Sales Fall 9.1%

Lagardere SCA dropped the most in three months in Paris trading after saying it will record losses of about 900 million euros ($1.2 billion) to reflect the lower value of its sports-marketing and pay-television units.

The impairment losses, equivalent to almost a third of Lagardere’s market value, were made as the Paris-based company expanded into sports business through the Unlimited division championed by Chief Executive Officer Arnaud Lagardere.

France's largest publisher fell as much as 6.3 percent to 21.68 euros, the steepest decline since Nov. 9, and traded at 21.84 euros as of 1:38 p.m. in the French capital, giving the company a market value of 2.9 billion euros.

“It was impossible to imagine that they would go another year without impairment losses,” said Conor O’Shea, an analyst at Kepler Capital Markets in Paris. “The important thing is that they’ve confirmed their 2011 guidance.”

Under Arnaud Lagardere, whose father Jean-Luc built the company, the publisher of Elle magazine sold its international magazines business last year and has targeted its Canal Plus France unit for disposal. A planned initial public offering of the pay-TV stake was put on hold last year after an earthquake in Japan roiled financial markets.

‘Not Easy’

“The main direction is still to go for an IPO,” Dominique D’Hinnin, co-managing partner of Lagardere, said on a conference call today. “We are talking to some potential third-party acquirers in order to consider a sale. It’s not an easy job because this is not liquid and a minority position.”

While there are “interested parties,” there is “nothing to be expected in the next days or weeks, D’Hinnin said.

Lagardere, citing “the weak environment in global economy and in stock markets” and prospects for Unlimited, said the impairment losses will hurt 2011 earnings scheduled for release March 8. The publisher confirmed its forecast for 2011 recurring operating profit in its media business to decline by a range of 5 percent to 12 percent excluding currency swings. Lagardere cut its forecast for the business in November.

Fourth-quarter sales fell 9.1 percent to 1.95 billion euros, in line with analyst estimates. Advertising revenue fell about 5 percent in January and February, while March “looks better,” D’Hinnin said.

Vivendi SA, which owns 80 percent of Canal Plus, has indicated it isn’t interested in buying the rest of the company, Anthony Mellor, Lagardere’s head of investor relations said on Nov. 17.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net.

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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