Private Media, a provider of adult entertainment products, services and mobile and Internet content, today announced its positive results for the three-month period ending December 31, 2005.
The Company reported an increase in sales of 1.1 million euro, to 7 million euro for the three month period ended December 31, 2005. Net income was 0.1 million euro for the three month period compared to a loss of 2.4 million euro for the same period last year.
DVD sales increased 0.2 million euro, or 5%, to 3.7 million euro. The increase in DVD sales was primarily due to more new movie titles being released. Video sales decreased 0.2 million euro, 0.0 million euro compared to the same period in 2004. The decrease in sales was the result of a general industry decrease in Video sales due to the consumer migration from Video to DVD. Magazine sales decreased 0.5 million euro, or 45% to 0.7 million euro as a result of lower quantities sold during certain retail channels during the three month period. Internet sales increased 0.2 million euro, or 23%, to 1.0 million euro as a direct result of the Company’s search engine optimization program.
Broadcasting increased 0.8 million euro, or 297%, to 1.0 million euro as a result of increased VOD sales in the period (see discussion under comment below) and Wireless increased 0.4 million euro, or 259%, to 0.5 million euro. The increase in Wireless sales was primarily due to our content availability with additional operators.
For the three months ended December 31, 2005, the Company achieved a gross profit of 4.2 million euro, or 60% of net sales, compared to 1.5 million euro, or 26% of net sales for the same period last year. The increase in gross profit as a percentage of sales was primarily the result of higher margin sales via Internet, Broadband, Wireless and Broadcasting platforms.
Selling, general and administrative expenses were 4.0 million euro for the period compared to 4.6 million euro year-on-year, a decrease of 0.6 million euro, or 14%. The decrease is primarily the result of reductions in bad debt expense, depreciation and the effects of outsourcing which was offset by start-up cost relating to our Asian subsidiary and Lifestyle division..
The Company reported an operating profit of 0.2 million euro for the three months ended December 31, 2005 compared to an operating loss of 3.1 million euro for the same period last year. The increase is the result of higher gross profit and reduced selling, general and administrative expenses.
Commenting on some important factors relating to the business going forward, Private Media Group, Inc., CFO, Johan Gillborg said, “During 2005 we increased our investment in our library of photographs and videos by 69% compared to the same period in 2004 and subsequently we will release more new proprietary movie titles in 2006 compared to 2005. We expect the increase of new movie releases in 2006 to result in increased DVD sales. We do also expect margins on DVD sales to improve since additional new releases available for sale increases the average sales price per unit.”
“In addition to the increase of proprietary movie titles available for sale, we are also consolidating the distribution in Europe of third party DVD content from Tera Patrick’s Teravision as from January 2006. This third party content distribution requires no investment from us and positively complements our proprietary content. We expect this to increase DVD sales and contribute to gross profit.”
