Viaplay Targeting Double-Digit Profit Margins In Five Years As Swedish Finance Authority Says Yes To Major Recap Program

Viaplay is targeting double-digit profit margins in five years’ time following the recapitalization program that it hopes will end months of strife, although it has once again downgraded financials for the coming year.

The Scandi outfit delivered the lofty ambition as the Swedish Financial Supervisory Authority approved its major recapitalization program, paving the way for new shares to be issued and traded on the Stockholm stock exchange.

Agreed last week at an Extraordinary General Meeting, the plan has effectively seen Viaplay rescued from collapse but at a price for its existing owners, who have had shares diluted. Canal+ and investment firm PPF have each taken a 29% stake in the outfit and the recapitalization plan will raise 4 billion Swedish crowns ($391 million) in new equity, write down 2 billion crowns in debt and renegotiate the terms of debt totalling 14.6 billion crowns.

Issuing a prospectus today, Viaplay said that the measures it has taken so far this year will enable core operations to hit “long-term annual sales growth in the low to mid-single digit percentage range, deliver double-digit operating profit margins in approximately five years and generate positive free cashflow in 2025.”

Due to the sale of the Paprika content production business and changes in currency exchange rates, however, it has slightly downgraded 2024 targets for core group turnover to 17.2–17.8 billion Swedish crowns, with an operating loss of 250 million crowns expected as a worst case scenario. A best-case scenario would see an operating profit of 50 million crowns, it said.

More information will come at Viaplay’s full-year 2023 results, with 18.5B Swedish crowns turnover forecast when the results are announced next month. The group has pushed back the date to February 22.

The move for now ends a nightmare few months for Viaplay, and CEO Jørgen Madsen Lindemann said the recapitalization will “secure the future and provide the opportunity to rebuild stakeholder value.” “We continue to take a broad range of operating and financial measures to improve our growth trajectory, profitability and liquidity,” he added. We have much to do, and many changes still to make, but our core customer proposition is strong, and we are taking steps every day to further enhance our entertainment products and content mix.”    

In June, ex-CEO Anders Jensen stepped down with immediate effect due to the deteriorating financial situation and was replaced straight away by Lindemann, the former boss of Viaplay’s old parent company MTG.

Lindemann acted with haste, forging a brutal redundancy plan that has seen around one-third of employees laid off and the pulling out of less crucial markets such as the UK, U.S. and Baltics, while massively reining in spending especially on splashy scripted originals. The group has revised its financial targets several times.

Lindemann previously blamed a “perfect storm” for the outfit’s woes, adding that some of the issues are “external and others of our own making.”