EBITDA increases by 5.8 percent in the first nine months / Revenues grow organically by 4.7 percent / Revenues from digital media grow organically by 10.6 percent / Forecast for the whole year confirmed
In the first nine months of the current financial year, Axel Springer SE profited from the sustained growth momentum of the digital business models. Adjusted for consolidation and currency effects, the digital media achieved an organic growth in revenues of 10.6 percent. In the reporting period, they contributed a total of 67 percent to total revenues, 72 percent to the consolidated EBITDA and 85 percent to advertising revenues. Despite significant deconsolidation effects, the total revenues increased by 0.6 percent to EUR 2,386.8 million (PY: EUR 2,372.7 million). Adjusted for consolidation and currency effects, the total revenues increased by 4.7 percent.
The earnings before interest, taxes, depreciation, and amortization (EBITDA) of Axel Springer, adjusted for non-recurring effects, improved strongly. In the first nine months, these earnings increased by 5.8 percent to EUR 419.0 million (PY: EUR 396.0 million). A significant improvement of 13.0 percent in EBITDA in the third quarter was reflected in this. With a double-digit percentage increase in EBITDA, the Classified Ad Models contributed the most to this development, while the financial performance of the other operating segments was influenced by scheduled higher investments in digital growth projects. The corporation increased its EBITDA margin in the first nine months of this year from 16.7 percent to 17.6 percent. Based on business performance so far, the Executive Board can confirm the forecast for the full year, which was specified at the time of the presentation of the semi-annual report. The corporation expects its total revenues to be at roughly the same level as in the prior year and to see an increase in its EBITDA in the low to medium single-digit percentage range.
Dr Mathias Döpfner, Chief Executive Officer of Axel Springer SE: "As we continue to develop our digital operations, we have made a big step forward this year – in the US as well as in the European markets. We are very pleased that this development is reflected in the growth of our corporation, and that we can confirm our forecast for the full year."
During this year, as announced, Axel Springer continued the further development of the digital growth projects BUSINESS INSIDER and UPDAY as well as the ongoing expansion of the US operations of the Bonial Group. Additionally, in July, Axel Springer took over 93 percent of the shares in eMarketer, a leading provider of market data. Furthermore, @Leisure Group, in which Axel Springer holds a majority share, acquired a controlling interest in Land & Leisure AS and further increased this stake in September. Also in September, Axel Springer agreed to acquire the remaining minority share of 39 percent in Car & Boat Media, the operator of the French classified ads portal for cars, La Centrale.
In a partnership with Discovery Communications, Axel Springer recently bundled several digital offerings in the USA in the new company Group Nine Media. The company is based in New York and, at the time of its launch, is already one of the largest digital media companies.
As a result of the expansion of the digital business models, the average number of employees of Axel Springer in the first nine months of the year, compared to the prior year’s period, increased by 1.6 percent from 14,908 to 15,143.
In the first nine months, the consolidated net income, adjusted for non-recurring effects as well as depreciation, amortization, and impairments from purchase price allocations, increased by 5.1 percent to EUR 208.9 million (PY: EUR 198.8 million). The adjusted earnings per share increased by 6.5 percent from EUR 1.60 to EUR 1.71. The unadjusted consolidated net income increased by 40.9 percent to EUR 363.4 million from EUR 257.9 million compared to the same period of the previous year. The main factors in this increase were the non-recurring effects resulting from the sale of commercial operations such as CarWale, as well as income from the foundation of the joint venture with Ringier in Switzerland and from the sale of office buildings. As a result, the earnings per share increased from EUR 2.20 to EUR 3.23.
Axel Springer increased its freely available cash flow in the first three quarters by 14.5 percent to EUR 210.8 million (PY: EUR 184.2 million). This was partly driven by the effects of the sale of office buildings at the Hamburg site. The net debt on September 30, 2016 was EUR 1,021.9 million, slightly lower than at the end of 2015 (EUR 1,066.6 million). In addition to Schuldscheine (promissory notes) in the amount of EUR 580.5 million (December 31, 2015: EUR 637.0 million), the corporation has long-term credit facilities in the amount of EUR 1,500.0 million, of which, on September 30, EUR 695.0 million (December 31, 2015: EUR 618.0 million) had been utilized. The company's equity ratio at the end of September remained at a high level at 40.4 percent (December 31, 2015: 38.6 percent).
In the first nine months, the Classified Ad Models remained the biggest driver for revenues and earnings. This segment increased revenues by 17.8 percent to EUR 645.0 million (PY: EUR 547.5 million). The strong organic revenue growth of 12.0 percent contributed to this, as did the consolidation effects, including those resulting from the integration of Immowelt. All three categories – jobs, real estate, and general/other – achieved double-digit growth rates. With growth of 16.6 percent, the Classified Ad Models also significantly improved their EBITDA. This figure improved to EUR 261.4 million from EUR 224.2 million in the prior year's period. Adjusted for consolidation and currency effects, the EBITDA increased by 7.7 percent. With an EBITDA margin of 40.5 percent (PY: 41.0 percent), this segment remained highly profitable.
The Paid Models recorded a decline in revenues of 4.9 percent in the reporting period to EUR 1,075.1 million (PY: EUR 1,130.5 million). The main reason for this development was the deconsolidation of the operations in Switzerland. Adjusted for consolidation and currency effects, the earnings remained almost stable (-0.1 percent). The rise in the number of paying digital subscribers for BILD and WELT to a total of 414,272 (IVW Paid Content 9/16) underpinned the continuing growth in our journalistic Paid Models. Compared with the prior year, the number of digital subscribers for BILD and WELT increased by 14.3 percent.
The EBITDA for the Paid Models in the first nine months amounted to EUR 134.0 million (PY: EUR 151.9 million). As a contributing factor, the national Paid Models increased the EBITDA by 8.0 percent. The overall earnings performance in this segment was influenced by the scheduled investments in the digital growth projects BUSINESS INSIDER and UPDAY. Excluding these investments, the EBITDA was slightly above the figure for the prior year. The margin for the EBITDA from the Paid Models was 12.5 percent compared to 13.4 percent in the prior year's period.
Deconsolidation effects also had an impact on the revenues from the Marketing Models segment. Here, due to the selling-off of companies, especially Talpa Germany, Smart AdServer and Smarthouse Media, revenues decreased by 3.5 percent to EUR 610.8 million (PY: EUR 632.7 million). Adjusted for consolidation and currency effects, these revenues increased by 7.0 percent. The EBITDA for this segment decreased by 10.5 percent to EUR 57.9 million (PY: EUR 64.7 million). This development is primarily due to higher launch costs as well as consolidation and currency effects. The EBITDA margin for this segment decreased slightly from 10.2 percent to 9.5 percent.