Axel Springer achieves new all-time high with earnings of EUR 510.6 million in 2010




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02.03.11

Axel Springer achieves new all-time high with earnings of EUR 510.6 million in 2010

To press release overview

Record EBITDA level of 2008 surpassed / EBITDA margin rises to 17.6 percent / Revenues increase by 10.8 percent / Digital and international activities grow significantly / Record dividend of EUR 4.80 per share / Revenues and earnings are expected to grow in 2011 / 3-for-1 stock split planned

Axel Springer achieved a new record profit in the 2010 financial year, exceeding the earnings forecast which had already been revised upwards twice during the course of the year. With a strong increase in EBITDA to EUR 510.6 million, Group earnings surpassed the half-billion-euro mark for the first time. All operating segments increased their profitability over the previous year and reported double-digit EBITDA margins. Axel Springer benefited from the growth of digital and international activities as well as from anti-cyclical investments in its brands. Continued cost discipline and the effects of portfolio adjustments also had a positive effect on the profit picture. Due to the growth of digital and international activities, Axel Springer saw Group revenues rise by 10.8 percent. Consolidation effects as well as organic growth of 3.5 percent contributed to this increase.

With earnings per share of EUR 8.19 the Management and Supervisory Boards will propose to the annual shareholders’ meeting the distribution of a record dividend of EUR 4.80 (PY: EUR 4.40) per share. A decision on a 3-for-1 stock split is also proposed to the shareholder’s meeting. Each no-par value share with a nominal value of EUR 3.00 will be split into three no-par value shares with a nominal value of EUR 1.00. The Management Board believes that this will further increase liquidity and the attractiveness of the stock for investors.

Dr. Mathias Döpfner, Chief Executive Officer of Axel Springer AG, said: “Our record earnings of over a half-billion euros greatly exceed the outlook we presented at the beginning of the 2010 financial year. The unabated continuation of our digitization and internationalization strategy during the crisis year of 2009 and anti-cyclical investments have paid off. In 2010 we were thus able to benefit from the economic upswing as well as the accelerated growth of our digital activities. Important strategic steps, such as the establishment of the joint venture for eastern Europe with Ringier and the full integration of StepStone, greatly expanded our revenues and earnings base. The results of our premium initiative for digital paid content are encouraging.”

In reference to the current financial year Döpfner added: “Our digital and international activities will also continue to drive the growth of revenues and earnings in 2011. Our strong national print brands will remain highly profitable with stable respectively a slight market-related decline in revenues. As one of the European market leaders Axel Springer is determined and in a position to help shape the dynamic change of the media world.”

The Management Board expects an increase in total revenues for the 2011 financial year. All revenue categories are expected to contribute to this increase: circulation, advertising and other revenues. The management believes that the slight decline in revenues in the national print segments will be more than compensated for by revenue growth in the international print and digital media segments. For the EBITDA a slight increase over the previous year is expected. A slight decline in earnings in the national print segments due primarily to higher paper prices will be more than compensated for by a robust increase in earnings generated by international and digital activities.

Digital and international activities continue to drive growth

Axel Springer saw earnings before interest, taxes, depreciation and amortization (EBITDA) adjusted for non-recurring effects and effects of purchase price allocations for the financial year 2010 rise by 53.0 percent to EUR 510.6 million (PY: EUR 333.7 million). The EBITDA margin improved from 12.8 percent to 17.6 percent. National newspapers remained highly profitable with an EBITDA margin of 24.8 percent, and national magazines set a new EBITDA record of 20.8 percent. International print media, with 15.3 percent, generated the highest profit margin since the segment was created. The Digital Media segment nearly doubled its EBITDA to EUR 85.8 million.

Group revenues adjusted for consolidation effects gained 3.5 percent. Group revenues including these effects rose by 10.8 percent to EUR 2,893.9 million (PY: EUR 2,611.6 million). Thanks to revenue increases of 51.3 and 28.6 percent respectively in the segments Digital Media and Print International, Axel Springer was able to more than compensate for a decline in revenues of the domestic print activities. The consolidation of the joint venture Ringier Axel Springer Media AG in the Print International segment as of the third quarter significantly contributed to this increase.

Share of international revenues rising – Advertising revenues grow significantly

International business activities continued to gain in importance in 2010. The international share of consolidated revenues rose from 21.0 percent to 28.1 percent. In international markets, Axel Springer generated revenues of EUR 812.3 million following EUR 547.6 million for the previous year. Acquisitions in the digital business and the expansion of activities in eastern Europe contributed significantly to this positive development.

The accelerated growth of digital media and the consolidation effects in the Print International segment are also reflected in the higher advertising revenues. Group-wide they rose by 21.6 percent to EUR 1,384.8 million (PY: EUR 1,138.5 million). Circulation revenues of EUR 1,174.3 million (PY: EUR 1,176.2 million) remained on the prior-year level. Here, Axel Springer was able to compensate for the effects of the decline in circulation of most of the national newspapers and magazines and deconsolidation effects through the first-time integration of activities into the Print International segment. Other revenues gained 12.8 percent to EUR 334.8 million (PY: EUR 296.9 million).

Adjusted consolidated net income rises 85.5 percent

Consolidated net income adjusted for significant, non-operating effects rose 85.5 percent to EUR 283.2 million (PY: EUR 152.6 million). In both 2010 and 2009 Axel Springer generated earnings from the sale of assets, which in 2009 were significantly higher than 2010. Reported consolidated net income in 2010 amounted to EUR 274.1 million (PY: EUR 313.8 million). Earnings per share amounted to EUR 8.19 (PY: EUR 10.19); adjusted earnings per share rose from EUR 4.53 to EUR 8.27.

Double-digit margins in all operating segments

At 24.8 percent the Newspapers National segment again achieved to the Group’s highest EBITDA margin. Segment revenues remained nearly stable at EUR 1,194.2 million (PY: EUR 1,213.7 million). Advertising revenues declined only slightly by 0.6 percent over the previous year; circulation revenues fell by 2.4 percent. Nonetheless, the segment EBITDA rose 21.4 percent to EUR 296.0 million (PY: EUR 243.8 million) despite the slight decline in revenues.

Axel Springer again experienced dynamic growth in the Digital Media segment. Segment revenues jumped 51.3 percent to EUR 711.8 million (PY: EUR 470.4 million). With a share of 24.6 percent Digital Media was the Group’s second-largest contributor to consolidated revenues. The acquisitions of StepStone and Digital Window (including buy.at) accounted for a significant share of this growth. In addition, the predominant number of digital activities enjoyed a double-digit growth in revenues. The segment saw advertising revenues rise 66.0 percent with other revenues improving by 14.4 percent. The EBITDA for digital media nearly doubled from EUR 43.2 million to EUR 85.8 million. The EBITDA margin also achieved a double-digit increase of 12.1 percent.

The profitability of National Magazines improved significantly in the 2010 financial year. The EBITDA margin of National Magazines rose from 10.6 percent to 20.8 percent. The segment EBITDA jumped 83.7 percent to EUR 101.0 million (PY: 55.0 million). Nearly all of the magazine groups and portfolio adjustments contributed to the earnings growth. The segment benefited from lower restructuring and paper costs. Segment revenues declined 6.1 percent to EUR 486.1 million (PY: 517.8 million) as a result of the sale of women’s and youth magazines and the business and financial media. Segment revenues adjusted for consolidation effects remained at virtually the same level as the previous year. Circulation revenues declined by 9.2 percent, or by 3.4 percent when adjusted for consolidation effects. Advertising revenues declined by 4.4 percent but were above the previous year’s level when adjusted for consolidation effects (+1.2 percent).

The first-time integration of assets contributed by Ringier into the joint venture Ringier Axel Springer Media had a positive effect on both the revenue and earnings situation of Print International. Segment revenues rose by 28.6 percent to EUR 400.9 million (PY: EUR 311.7 million). Circulation and advertising revenues improved significantly by 24.9 percent and 29.5 percent respectively. Segment revenues adjusted for consolidation and foreign exchange effects declined by 2.6 percent. Adjusted circulation revenues declined by 2.0 percent and advertising revenues by 4.8 percent compared to the previous year. The EBITDA of the international print media rose from EUR 12.3 million to EUR 61.5 million. The EBITDA margin improved to 15.3 percent compared to 3.9 percent for the previous year.

The segment Services/Holding saw a slight increase in revenues to EUR 100.8 million (PY: EUR 98.1 million). The EBITDA amounted to EUR -33.7 million (PY: EUR -20.5 million).

Financial situation: Axel Springer free of net debt

The cash flow from operations of Axel Springer grew from EUR 270.0 million to EUR 358.1 million as the result of the positive development of business. The cash flow from investing activities amounted to EUR -200.6 million (PY: EUR 116.7 million). In 2010 it was mainly influenced by the outflow of funds related to the establishment of the Ringier Axel Springer Media AG and the acquisition of a 12.4-percent stake in SeLoger.com as well as the proceeds from the sale of StepStone Solutions. The previous year’s figure was significantly influenced by the proceeds from the sale of participations in regional newspapers. The cash flow from financing activities was positive at EUR 76.1 million (PY: EUR -345.5 million). In 2010 Axel Springer generated a free cash flow of EUR 299.3 million (PY: EUR 231.3 million).

As of December 31, 2010, Axel Springer possessed net liquidy in the amount of EUR 79.6 million (31.12.2009: net debt of EUR 193.0 million) and was thus free of net debt. The equity ratio rose from 40.8 percent to 49.2 percent. The first-time consolidation of Ringier Axel Springer Media AG and other companies contributed significantly to the increase in the average number of employees to 11,563 (PY: 10,740).

Press Contact Axel Springer SE: Edda Fels
Tel: +49 30 2591 77600

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