Market Downbeat On CTS Results

It’s no surprise that CTS Eventim’s nine-month profit from ticketing is about euro 8 million down on 2007’s record-breaking World Cup year, but the market has taken it badly and wiped about 25 percent off the value of the company.

It’s the second bashing the CTS share has taken this year. In July an analysts’ report said it was overvalued at euro 36.28, which caused it to drop to euro 26.55 over the course of a month.

What must make this second stock slump more galling for CTS – apart from the fact it’s just recovered from the first one – is that the latest figures show the group’s live music promoters appear to have clawed back nearly three-quarters of what it cost to be without a World Cup in 2007.

The combined enterprises of Dirk Becker, Folkert Koopmans, Marek Lieberberg, Peter Pracht, Peter Rieger and Dieter Semmelmann yielded a pre-tax profit of euro 19.4 million – euro 5.9 million, or 43.2 percent, up on the euro 13.5 million they brought in for the same period last year.

It came from revenues of euro 230 million, 23 percent more than the euro 187.1 million the promoters – the so-called Medusa Group – turned over in the first nine months of 2006.

It’s a remarkable performance in a year when Koopmans reckons bad weather caused ticket sales for his major festivals, including Hurricane and Southside, to drop 20 percent.

And major tours including The Police, which didn’t pull well in the Munich and Hamburg stadiums, Pearl Jam (Düsseldorf), Red Hot Chili Peppers (Munich) and George Michael (Nuremburg) all hit a flat spot or two in Germany.

Three of The Rolling Stones’ stadium shows had their configurations changed, with the band playing sideways – rather than positioning the stage at one end – to reduce the empty spaces.

If the World Cup numbers are ignored to make a better like-for-like year-on-year comparison, the high profitability of Internet sales actually boosted revenues by 36.2 percent from euro 40.3 million to euro 54.9 million.

Again ignoring the World Cup effect, the EBIT was substantially improved by 62.2 percent, from euro 7.9 million to euro 12.8 million.

Overall, the group generated euro 281.5 million in revenues with pre-tax earnings slightly down from euro 34 million to euro 32.1 million.

The figures would have been even better if it hadn’t been for the euro 1.3 million it cost the company to integrate its new acquisitions, although the balance sheet doesn’t make it clear if the bulk of the money was dropped in either Italy, Switzerland or Russia.

Although it probably wishes the world soccer finals could always be staged in Germany, the CTS management board says it’s satisfied with the last year’s progress.

It’s looking for the company to grow its Fansale resale platform, although it’s said to be getting stiff competition from Viagogo, expand the Internet business and make "additional acquisitions."

TicketTurk, Turkey’s second largest ticket seller, is known to have been in Eventim’s sights for over a year. But things look to have stalled on that front.

On May 18 a CTS ad hoc press notice announcing it had bought a 43 percent stake in Italy’s TicketOne finished by saying, "Turkey and Spain are among the next acquisition targets."

In the absence of any news of purchases in either country, maybe German investors are still being swayed by that July 10 report from SES Research.

Under a heading of "The Completely Wrong Price," it argued that the historically acquisitive company is running out of room for expansion, and that investors should be wary that its continued period of growth is drawing to an end.

SES recommended the share as a "sell" and the unit price dropped nearly 30 percent from euro 36.28 to euro 26.55.

At the time, CTS legal and communications chief Rainer Appel told Pollstar the report was "misleading in various respects" and arrives at conclusions that are at "the very least, objectionable," while the share hovered at around the euro 26 mark.

By mid-October much of the damage looked to have been repaired as CTS stock climbed back to about euro 32.

But the latest set of figures, which were released November 21, saw the price tumble back down to a November 27 close of euro 24.81.