Financial Results: Picture Brightens for Some

By Margo McCall -- Tradeshow Week, 8/22/2005

After two years of doldrums, German messes are bouncing back, reporting strong year-end results and packed trade fair calendars for 2005. But in a country with a tradition of biennials, companies' expectations seem to depend as much on the show cycle as the state of the economy.

Messe Frankfurt, whose performance tends to spike during even-numbered years, saw its 2004 revenue rise to •364 million, up from •353 million during the previous year. Overall, the company succeeded in nearly doubling its 2003 net profit of •10 million.

Messe Frankfurt and its foreign subsidiaries staged 109 fairs and 237 conferences and events last year, together drawing 2.9 million visitors and more than 57,700 exhibitors. During 2003, 112 fairs and 195 conferences drew 3.9 million visitors and 58,500 exhibitors.

With 13 trade fair launches planned, including two in North America, 2005 is poised to be even better for Messe Frankfurt, the world's second-largest event organizer. Chairman Michael von Zitzewitz said he expects the company to exceed 2004 performance levels, but warned "against overoptimistic expectations."

The messes' financial reports, for the most part, echo the assessment by AUMA (the Assn. of the German Trade Fair Industry) that international trade fairs in Germany are recovering. AUMA noted a 2-percent increase in the number of exhibitors in the first quarter of this year, while visitor numbers remained flat. If the trend continues for the duration of 2005, as AUMA expects, international trade fairs in Germany would post their first positive results since 2001.

Deutsche Messe, producer of CeBIT and Hannover Fair, expects 2005 revenue of •300 million. That is up considerably from 2004, when revenue plunged to •224 million, •30 million below 2003 levels. The 54 Hannover events last year drew 1.8 million visitors and 21,429 exhibitors spanning 1.8 million square meters (19.4 million square feet).

"This year's tradeshow calendar is the fullest in the company's history, and we are expecting to see a profit in the upper single-digit millions," stated CFO Stephan Kuehne in issuing the company's 2004 annual report last month.

The revenue fluctuations can be attributed, at least in part, to the cycling of Deutsche Messe's large biennial shows, more of which take place during odd-numbered years. The second half of this year will feature EMO Hannover, CeMAT and AGRITECHNICA.

Officials at Messe Duesseldorf, which typically does better during even-numbered years, described 2004 as "cyclically outstanding." The company generated •369 million revenue, compared with •239.7 million in 2003. The fully booked Duesseldorf Trade Fair Center hosted 24 proprietary events and nine guest events, compared with 18 proprietary events and 16 guest events during the previous year. Since 1999, however, there has been a slight decline in the total number of events the center hosts.

Messe Duesseldorf expects lower sales and net income this year as a result of show cycling. Only 20 proprietary events and 11 guest events will be held at its trade fair center this year.

Koelnmesse reported •159.2 million revenue last year, down from •191.4 million in 2003. The company's 69 fairs — up from 59 in 2003 — together drew about 29,000 exhibitors and more than 1.5 million visitors.

In 2004, Messe Muenchen generated •236.6 million revenue, compared with •153.6 million the previous year. Its 14 events and 244 guest events at the New Munich Trade Fair Centre, the Intl. Congress Centre Munich and the M,O,C, Events and Order Centre in 2004 together attracted more than 33,000 exhibitors and 2.3 million visitors. Revenue for this year is projected at •190 million.

In recent years, most of the messes have been looking at international expansion to fuel continued growth. Foreign business last year generated •74 million (U.S. $91.5 million) revenue for Messe Frankfurt, accounting for 20 percent of its business. Fifty-nine of its fairs were held outside Germany, one less than last year. More than half were held in Asia.

Half of the 108 events produced by Deutsche Messe last year took place abroad. Although those events recorded 30 percent revenue growth, they still comprise a relatively small one-tenth of all revenues.

Koelnmesse, meanwhile, established a Netherlands subsidiary, two offices in China and one each in Vietnam and the Ukraine as its five-year-old international operation celebrated its first profit. A subsidiary will also be set up in Tokyo to support the March 2006 launch of Photo Imaging Expo Tokyo.

The messes have also been trying to increase the number of foreign exhibitors and visitors at homegrown trade fairs to make up for attendance declines by German visitors and exhibitors. At Messe Frankfurt events last year, 68 percent of exhibitors and 35 percent of visitors hailed from foreign countries. That compares with 65 percent foreign exhibitors and 31 percent foreign visitors for 2003 Messe Frankfurt events.

Some 58 percent of Messe Duesseldorf visitors were from outside Germany in 2004, up from 54 percent in 2003. More than half of the exhibitors and 41 percent of visitors drawn to Koelnmesse's events were foreign.

Several construction projects are also underway. Messe Frankfurt is engaged in a •300 million modernization of its exhibition site. Construction of a new road is set to start next March. The new Hall 11 will be built next year, followed by the conversion of Hall 6 three years later.

Koelnmesse is building four new halls, renovating existing exhibition space and realigning an entrance to provide easier access to an express station.