Revenues grow by 7.1 percent / EBITDA rises to EUR 136.5 million / EBITDA margin of 17.3 percent / Digital Media accounts for 34.4 percent of Group EBITDA / Free cash flow of EUR 108.3 million
Axel Springer has been off to a strong start in the new financial year with growth in both revenues and earnings. The Group benefited from the positive growth effects of its digitization strategy and posted a 7.1 percent increase in revenues during the first quarter. Both organic growth and the consolidation of new companies contributed to this development. The strong profitability of national print media and a significant earnings improvement of digital media led to a 7.5 percent increase in EBITDA. The EBITDA margin of 17.3 percent remained at the high level of the previous year. Based on the overall positive development at the beginning of the year, the Management Board confirmed its full year guidance.
Axel Springer increased earnings before interest, taxes and depreciation (EBITDA) adjusted for non-recurring effects and effects of purchase price allocations by 7.5 percent to EUR 136.5 million (PY: EUR 126.9 million) in the first quarter. With an EBITDA margin of 23.4 percent the Newspapers National segment improved its profitability on a high level. The EBITDA margin of 21.1 percent achieved by the Magazines National segment was also above the previous year’s high figure. Digital Media grew its EBITDA margin by 5 percentage points to 17.8 percent. However, adverse economic conditions in important international markets had a dampening effect on the profitability of the international print media. The EBITDA margin in this segment, which was also affected by restructuring expenses and non-recurring charges, fell from 17.0 percent to 11.4 percent.
Total revenues in the first quarter grew 7.1 percent to EUR 789.0 million (PY: EUR 736.7 million). Due to the dynamic growth of its digital media Axel Springer was able to more than compensate for the noticeable decline in revenues in the Print International segment. Higher circulation revenues contributed to the stable development of revenues generated by the national print media. The Group achieved growth adjusted for consolidation effects of 2.8 percent.
Dr. Mathias Döpfner, Chief Executive Officer of Axel Springer AG: “In the first quarter we were able to continue seamlessly with the excellent business development we enjoyed during the record year of 2011. Digital activities now account for more than half of total advertising revenues and one-third of the operating result of Axel Springer. In past months we also strengthened our digital activities through targeted acquisitions with a focus on international expansion. In doing so, we closely adhered to our clearly defined digitization strategy. In the first months of the current financial year the Group further pursued this strategy for example with the acquisition of the British online recruiting firm Totaljobs.com and the internationalization of activities such as kaufDA and iKiosk.”
Under the assumption that general economic conditions do not experience a significant deterioration, the Management Board continuously expects to generate a single-digit percentage increase in the Group’s total revenues in the financial year 2012. The Management Board expects that growing revenues in the digital media business will more than compensate for slightly lower revenues in the print business. The Management Board also expects that the Group’s EBITDA will be slightly higher than the corresponding figure for 2011. In that respect, the Management Board anticipates slightly lower earnings in the print business, and substantially higher earnings in the digital business, compared to 2011.
In the first quarter Axel Springer generated one-third (33.4 percent) of total revenues abroad (PY: 31.1 percent). International revenues rose by 14.9 percent to EUR 263.5 million (PY: EUR 229.5 million). This was mainly driven by the ongoing international expansion of digital activities.
Advertising revenues for the reporting period developed extremely positively, rising 10.3 percent to EUR 399.6 million (PY: EUR 362.1 million). This category of revenues accounted for slightly more than half of Group revenues for the quarter. Whereas advertising revenues in the digital media segment rose by 31.4 percent, the national and international print media showed partially significant declines.
Group circulation revenues improved by 1.4 percent to EUR 293.8 million (PY: EUR 289.8 million). Growth in the Newspapers and Magazines National segments more than compensated for a decline in the Print International segment.
Backed by a strong increase of digital media, other revenues grew by 12.8 percent to EUR 95.6 million following EUR 84.8 million for the same period of the previous year.
In the first quarter Axel Springer saw consolidated net income rise 8.8 percent from EUR 63.0 million to EUR 68.5 million. Consolidated net income adjusted for significant, non-operating effects improved by 6.2 percent to EUR 77.5 million (PY: EUR 73.0 million). Earnings per share gained 10.7 percent from EUR 0.56 to EUR 0.62; the adjusted increase was 7.5 percent to EUR 0.68 (PY: EUR 0.64).
The Newspapers National segment posted an increase in EBITDA margin from 22.3 to 23.4 percent in the first three months despite a slight decline in revenues. Revenues were EUR 275.9 million following EUR 279.9 million for the first quarter of the previous year. Whereas advertising revenues fell 5.0 percent, circulation revenues gained 1.6 percent. This was partly due to the copy price increases implemented for portions of BILD’s circulation in the second quarter of the previous year. The Newspapers National segment posted a 3.6-percent increase in EBITDA to EUR 64.6 million (PY: EUR 62.4 million).
Revenues in the Magazines National segment gained 1.4 percent to EUR 115.5 million (PY: EUR 113.9 million). Here, higher circulation revenues more than compensated for the 8.3-percent decline in advertising revenues. The 4.9-percent increase in circulation revenues is attributable in particular to the calendar effect of more publication days compared to the first quarter of last year. The Magazines National segment, which enjoyed a 4.0-percent increase in EBITDA to EUR 24.4 million (PY: EUR 23.4 million), remained highly profitable with a rise in EBITDA margin to 21.1 percent (PY: 20.6 percent).
Business in the Print International segment was affected by the challenging economic environment in important international markets. Revenues in the segment fell 7.3 percent to EUR 104.6 million (PY: EUR 112.9 million). Segment revenues adjusted for consolidation and currency effects declined by 5.5 percent. Advertising revenues in particular plunged, and circulation revenues were lower than the previous year. Segment EBITDA was EUR 11.9 million (PY: EUR 19.1 million). The EBITDA margin, which was also affected by restructuring expenses and non-recurring charges, declined accordingly from 17.0 percent to 11.4 percent.
The Digital Media segment, which continued to grow dynamically in the first quarter, was the second-highest contributor to Group earnings. The segment revenues of EUR 263.1 million (PY: EUR 202.2 million) were only slightly below those generated by the Newspapers National segment, currently the top segment by revenues. Contributing to this 30.1-percent rise were increases of 31.4 and 24.6 percent for advertising and other revenues respectively. Digital media activities thereby generated over half of Group advertising revenues in the first quarter. Revenues grew organically by 15.8 percent. The segment accounted for 33.3 percent of total Group revenues. The Digital Media segment enjoyed an 81.8-percent jump in EBITDA to EUR 46.9 million (PY: EUR 25.8 million). Thus, it accounted for 34.4 percent of the Group’s total EBITDA. The segment EBITDA margin gained 5 percentage points to 17.8 percent (PY: 12.8 percent).
Revenues in the Services/Holding segment improved by 7.3 percent to EUR 30.0 million (PY: EUR 27.9 million). EBITDA amounted to EUR -11.4 million (PY: EUR -3.9 million). This decrease resulted mainly from the appreciation of the company’s share price in the first quarter, which led to higher charges for the share-based compensation program.
Axel Springer saw free cash flow rise significantly in the first quarter. It improved by 45.6 percent to EUR 108.3 million (PY: EUR 74.3 million). Net debt declined from EUR 472.8 million at the end of 2011 to EUR 353.3 million as of March 31, 2012. The Group had unutilized credit lines of approximately EUR 1 billion at the end of the quarter. The equity ratio was 48.0 percent (Dec. 31, 2011: 46.1 percent). As a result of the continued employee growth of digital media through both organic growth and acquisitions, the average number of employees rose to 13,294 following 12,206 for the first quarter of the previous year.
This press release (also in German), Group key figures and the quarterly financial report can be downloaded from www.axelspringer.de/q-1-2012.