Consolidated revenues up 6.9 percent year-on-year / EBITDA increases by 8.1 percent / Significant increase in consolidated net income / Proportion of international revenues increases to 42.5 percent / Outlook for full year confirmed
Axel Springer has continued its profitable growth course in the first nine months of the current financial year. The digital business models have been a significant factor in this development with sharply rising revenue and earnings contributions. In the reporting period, digital activities accounted for more than 52 percent of the consolidated revenues and almost 70 percent of the consolidated EBITDA. From January to September 2014, the consolidated revenues were up 6.9 percent. Axel Springer reported increased revenues in all segments. The consolidated EBITDA increased by 8.1 percent. Axel Springer could again increase it’s EBITDA margin; it rose from 16.5 to 16.7 percent.
Dr. Mathias Döpfner, Chief Executive Officer of Axel Springer SE: “Axel Springer is making good progress in becoming the leading digital publisher. The contribution of our digital activities to the EBITDA is about to jump over the mark of 70 percent. After successful nine months, we confirm our targets for the full year.”
In the first nine months, Axel Springer increased its consolidated revenues by 6.9 percent to EUR 2,177.9 million (PY: EUR 2,037.2 million). Adjusted for consolidation and currency effects, consolidated revenues were up 2.5 percent. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for non-recurring effects and purchase price allocation effects, improved by 8.1 percent to EUR 363.9 million (PY: EUR 336.7 million). Rising earnings contributions of digital media activities, in particular the Classified Ad Models, are having a positive impact.
The Executive Board continues to expect a mid single-digit percentage increase in Group-wide total revenues in financial year 2014. It anticipates that the expected decrease in circulation revenues will be more than offset by the planned increase in advertising revenues and other revenues. All three operating segments – Paid Models, Marketing Models, and Classified Ad Models – are expected to generate higher revenues.
The Executive Board continues to expect a low double-digit percentage increase for the EBITDA. It anticipates a significant increase in the EBITDA in the Classified Ad Models segment, whereas the Marketing Models segment is expected to achieve an EBITDA at the year-ago level, due to the planned expenditures for establishing new digital business models. The Executive Board expects the EBITDA of the Paid Models to decline in the low to mid single-digit percentage range, due to the higher than expected restructuring expenses.
Axel Springer continued to profit in the first nine months from the accelerated digitization of the Group. The pro-forma revenues of the digital media activities rose to EUR 1,192.5 million (PY: EUR 1,091.5 million). Organic growth of digital media activities thus amounted to 9.3 percent.
International business also benefited from the strong growth of digital media activities. At EUR 926.6 million, the Group’s international revenues increased by 10.2 percent (PY: EUR 840.6 million). Thus, in the first nine months Axel Springer generated 42.5 percent of the total revenues in international markets (PY: 41.3 percent).
As expected, advertising revenues and other revenues increased significantly in the reporting period, whereas circulation revenues declined. Advertising revenues increased by 8.4 percent as a result of the positive development of the digital activities, reaching EUR 1,278.3 million (PY: EUR 1,179.2 million). Axel Springer’s digital activities accounted for around three quarters (74.4 percent) of its advertising revenues. Circulation revenues dropped by 3.6 percent to EUR 557.2 million (PY: EUR 578.2 million), partly caused by consolidation effects related to the sale of French print titles in the middle of 2013. At EUR 342.4 million, Axel Springer has achieved a sharp rise in the other revenues, which increased by 22.4 percent (PY: EUR 279.8 million). An important factor for this was the significant increase in Paid Models and Marketing Models.
At EUR 228.9 million, Axel Springer has improved the consolidated net income in the first nine months by 58.6 percent (PY: EUR 144.3 million). In addition to the positive operating development, this was particularly attributed to the profit from the sale of the minority shareholding of the real estate portal provider iProperty.com, which was held by SeLoger.com. The earnings per share rose from EUR 1.21 in the previous year to EUR 1.78. At EUR 186.0 million, the consolidated net income adjusted for non-recurring effects rose by 10.4 percent (PY: EUR 168.5 million). Axel Springer’s adjusted earnings per share rose from EUR 1.36 to EUR 1.47.
In the Paid Models segment, Axel Springer slightly increased its revenues in the first three quarters by 0.9 percent to EUR 1,129.4 million (PY: EUR 1,119.6 million). Adjusted for consolidation effects, revenues fell by 2.6 percent in this segment. At EUR 468.7 million, the segment’s advertising revenues were 1.1 percent lower than the previous year’s figure (EUR 474.1 million). Adjusted for consolidation effects, the decline amounted to 5.1 percent. Following the positive development in the second quarter due to the Soccer World Cup, the national advertising revenues in the third quarter recorded a stronger decline compared with the prior year. This resulted from strong comparison figures for the prior year, partly due to the BILD special edition on the German federal parliamentary elections in the prior year. The circulation revenues from the Paid Models declined to EUR 557.2 million from EUR 578.2 million compared to the same period of the previous year. Adjusted for consolidation effects the circulation revenues were only 1.3 percent lower. Due to copy price increases and the rising contribution of digital paid content, German circulation revenues were practically unchanged (-0.1 percent). Other revenues rose by 53.8 percent to EUR 103.6 million (PY: EUR 67.3 million). Adjusted for consolidation effects, this growth came to 4.1 percent. The EBITDA from the Paid Models amounted to EUR 170.2 million compared to EUR 187.1 million in the previous year. The segment generated an EBITDA margin of 15.1 percent (PY: 16.7 percent).
At EUR 564.9 million, the Marketing Models segment increased revenues by 11.8 percent (PY: EUR 505.4 million). At EUR 464.5 million, both reach-based marketing and performance-based marketing contributed to the 9.5 percent growth in advertising revenues (PY: EUR 424.3 million). Other revenues recorded a strong growth of 23.8 percent to EUR 100.4 million (PY: EUR 81.1 million), which was mainly driven by reach-based marketing. Despite higher expenditures for establishing and developing new business models, the segment’s EBITDA was slightly higher at EUR 76.8 million than the previous year’s level of EUR 75.3 million. The EBITDA margin amounted to 13.6 percent (PY: 14.9 percent).
Axel Springer registered particularly dynamic growth in Classified Ad Models. At EUR 357.1 million, the segment increased revenues by 20.5 percent (PY: EUR 296.4 million). Both the dynamic operating growth development and the consolidation effects from Saongroup, YourCareerGroup and the first-time consolidation of Yad2 and LaCentrale drove this increase. Adjusted for these effects, the revenues increased by 9.1 percent. At EUR 345.1 million, the segment’s advertising revenues increased by 22.9 percent (PY: EUR 280.8 million). Adjusted for consolidation effects, these rose by 10.9 percent. Other revenues fell from EUR 15.6 million to EUR 12.0 million. At EUR 160.2 million, Classified Ad Models recorded a sharp increase in the EBITDA, which improved by 34.6 percent (PY: EUR 119.1 million). The EBITDA margin rose by another 4.7 percentage points to 44.9 percent.
At EUR 126.5 million, the revenues of the Services/Holding segment were 9.2 percent higher than the year-ago figure (EUR 115.8 million). The segment’s EBITDA amounted to EUR -43.3 million (PY: EUR -44.7 million).
At EUR 149.0 million, the free cash flow reached the same level in the first nine months as the level in the year-ago period (EUR 151.2 million). The net debt decreased from EUR 471.3 million at the end of 2013 to EUR 164.3 million as of September 30, 2014. As of the end of the third quarter, Axel Springer had access to short-term and long-term credit facilities in the amount of EUR 920.0 million (December 31, 2013: EUR 770.0 million). In October 2014 the company used the attractive financing environment to refinance an existing Schuldschein (promissory note). Thus, Axel Springer could improve the average interest and extend the average term. The Group therefore remains financially well-positioned to drive the company’s digital transformation. The equity capital rose from 47.0 percent at the end of the 2013 financial year to 52.6 percent at the end of September 2014. The average number of the Group’s employees rose to 13,428 as a result of establishing and developing digital business models as well as acquisitions (PY: 12,812).