CheilWorldwide 3Q 2012 Eng Final

7/31/2019 CheilWorldwide 3Q 2012 Eng Final

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2012. 10.25

Earnings Release3Q 2012Earnings Release3Q 2012


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IDEA ENGINEERING GROUP

Disclaimer

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The financial information in this document are consolidated earnings results based on K-IFRS.

This document is provided for investors review before our external audit of 3Q 2012

financial results released from our headquarters.

The audit outcomes may cause some parts of this document to be revised.

This document contains forward-looking statements - that is, statements related to future, not

past events.

In this context, forward-looking statements often address our expected future business and

financial performance, and often contain words such as expects, anticipates, intends, plans,

believes, seeks, or will.

Forward-looking statements by their nature address matters that are, to different degrees,

uncertain.

For us, particular uncertainties which could adversely or positively affect our future results include:

the behavior of financial markets, including fluctuations in exchange rates, interest rates and

commodity prices; strategic actions including dispositions and acquisitions. These uncertainties may

cause our actual results to be materially different from those expressed in this document.


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1. Financial performance

Financial summary (K-IFRS consolidated basis)

Consolidated gross profit analysis

Profitability analysis

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Financial summary (K-IFRS consolidated basis)

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1Q~3Q%

(Unit: Billion KRW)

3Q

0.921.3Equity holders of the parent 59.9

0.8 75.0Non-controlling interests 3.5

22.2Operating profit 22.527.5

28.1 14.9Profit before income tax 32.3

90.7 28.4SG&A 116.5

112.9 28.6Gross profit 145.2

452.6Sales 607.3 34.2

31.5Finance incomes/losses 3.7 5.4

22.1 1.8Profit for the quarter 22.5

0.3 -Other operating profit/losses 1.2

Equity method gains/losses 1.1 0.2

1,186.9

76.7

89.3

314.0

394.0

1,643.1

13.3

63.4

3.3

0.7

3Q

2012 2011

1Q~3Q 3Q1Q~3Q

58.6

1.8

66.6

80.3

244.6

309.6

14.0

60.4

1.6

0.3

2.2

94.4

15.2

11.2

28.4

27.3

38.4

5.0

5.0

-

21.1

1.4

450.0


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Domestic gross profit up 4.2% to 47.1B YoY- Continuous domestic business growth in a shrinking ad market

Overseas gross profit up 44.9% to 98.1B YoY

(Unit: Billion KRW)

- Expanded new client development and increased SEC global marketing campaigns

Existing clients : SEC, NHN, Daewoo E&C etc..

New clients : Hanwha Group, BGF retail, Maeil dairies, etc..

Consolidated gross profit analysis

Consolidated gross profit

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3Q FY12

OverseasDomestic

Domestic Vs Overseas gross profit

Consolidated gross profit up 28.6% to 145.2B YoY

OverseasDomestic

3Q FY11

28.6%

44.9%

112.9

145.2

4.2%45.2

3Q FY12

67.7

98.1

47.1

67.6%

32.4%


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- Finance income/expense down 31.5%

- Due to hiring of top talents in overseas : SG&A increased 28.4% to 39.4B

Profitability analysis

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Operating Profit

Operating profit up 22.2% to 27.5B YoY

Operating profit Profit before income taxes

Finance Income+ Equity-method gains/losses

(Unit: Billion KRW) (Unit: Billion KRW)

3Q FY123Q FY11

27.522.5

22.2%

3Q FY11

14.9%32.3

28.1

4.2 2.3

22.2%

14.3%

3Q FY12

27.522.5

- Equity-method gains/losses up 450%

Non-operating revenue down 14.3% to 4.8B YoY

Profit before income taxes up 14.9% to 32.3B YoY

- Employee salary increased 32.5% to 77.1B, general expense 21.2% to 39.4B


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IDEA ENGINEERING GROUPIDEA ENGINEERING GROUP

2. Business performance

Domestic business performance

Overseas business performance

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- 4 traditional ad market down 12.9% to 978.0B YoY

Broadcasting ad market down 14.3% to 514.6B YoY


Domestic ad market

Cheils domestic business

Largest ad industries: in the order of finance, IT and services

Print ad market down 11.3% to 463.4B YoY

(Unit: Billion KRW)

< Domestic ad market: 4 media>

Broadcast

Print

- Domestic gross profit up 4.2% to 47.1B YoY

Due to slowdown of domestic demand,

4 media ad gross profit down 9.1% to 14.9B YoY

: Broadcasting ad down 8.2% to 9.0B YoY

Print ad down 10.6% to 5.9B YoY

: CATV G.P. up 28.0% to 6.4B YoY

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CATV, marketing services gross profit up

< Cheils domestic gross profit by media>

Broadcast

Print

CATV

Internet

Marketingservices

(Unit: Billion KRW)

522.4

2Q FY11 2Q FY12

600.5

463.4

514.6

46.5%

53.5% 52.6%

47.4%

1,122.9978.0

12.9%

47.14.2%

45.2

6.6

9.8

5.0

6.2

17.6

13.7%

38.9%

11.1%

14.6%

21.7%

3Q FY11 3Q FY12

12.5%

42.3%

13.6%

12.5%

19.1%

5.9

6.4

9.0

5.9

19.9

Marketing services G.P. up 13.1% to 19.9B YoY

(except generalprogramming TV)


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- SEC Gold Rush, NHN Appisode, Samsung Life Insurance Bridge of the life, Dong A Bacchus etc..

Successful new account development

Hanwha Group(PR), Orion, Korea Land&Housing etc..

Proved world class creativity by winning international ad awards


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- 3Q 47.3B, 125.3B KRW YTD

- Awarded Korea's first Spikes Asia Grand-Prix

Successful ad campaigns and marketing activities

Samsung Electronics Insight , Emart Sunny Sale

- Ad Stars 2012 in Busan The largest number of awards by winning 26

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New overseas clients development : 6.63M USD

- Continuous new clients due to strengthened global competiveness

Overseas business performance

Olympics marketing & Global Exhibitions, Events

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Expanded overseas offices

- Portugal and Romania in process

* Revenue based

- Incorporated in the Philippines

Deutsche Bahn(Germany), Vodafone(Turkey), Ralf Ringer(Russia) etc.

- SEC London Olympics marketing : Ads, On-site promotion, Hospitality etc.

- Exhibitions : Samsung Mobile Unpacked 2012(Berlin), IFA (Berlin), Photokina (Koeln)

- Global events : Big Bang Alive Galaxy Tour, Galaxy Note II Tour etc.


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IDEA ENGINEERING GROUPIDEA ENGINEERING GROUP

3. Further outlook for FY2012

Advertising market

Cheil Worldwide in 4Q FY2012

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Global ad market: small growth expected despite economic slowdown

Advertising market

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Domestic ad market: small growth expected due to seasonality

- Global ad market is expected to grow +3.8% to $501.5B (a decrease from Junes expectation of +4.3%)

US ad market is expected to grow +4.3%, EU 0.7% , and Asia Pacific +6.2%

4 traditional media is expected to grow +2.3%, and digital 15.1%

(Source: ZenithOptimedia 12 October)

- Small growth expected in 4th quarter (peak season to terrestrial TV advertising)

KAI 115.0 in 4Q (over 100 indicates that advertisers will increase marketing spend)

KAI projection in Nov : Terrestrial TV 102.5, Cable TV 103.7, Newspaper103.9, Internet 106.0

- Forecasting ad market by industries

Increase : household electronics(139.8), groceries(132.1), computer & communications(131.4)

Decrease : pharmaceuticals & medical service (82.8), fashion(78.2), cosmetics(67.7),

transportations(62.4)

(Korean Ad Index)

TV, Radio, Newspaper, Magazine


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Domestic ad campaigns expected to rise by seasonality

IT (SEC, KT, etc..), Food & beverage (Dongsuh Foods, CJ, etc..)

Cheil Worldwide in 4Q 2012

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SEC : Smartphone (GalaxyNote II, S3 Mini), Smart PC(ATIV series), New smart TV, etc.

Expected to expand non-Samsung clients

- More media-only clients expected due to change in Korean media environment

- Expansion of integrated solution including consulting and BTL campaigns

Expected to enhance global marketing campaigns with newly acquired companies

- China : collaboration of Cheil- OTC - Bravo Asia (automobile clients and etc.)

- US : collaboration of Cheil- McKinney (non-Samsung projects and etc.)

New opportunities through expansion to global markets

- Acquiring new clients through foreign local leaderships

- Increase of profit by expanding to new retail business

Media-only new clients in 2012 : Maeil Dairies, Kiwoom securities, etc.


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Thank you

And we welcome your questions

CheilWorldwide 3Q 2012 Eng Final

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