Revenues up by 3.9 percent / EBITDA margin of 19.1 percent / Digital media grow dynamically and significantly increase profitability / National print media highly profitable despite weaker advertising market
The business development of Axel Springer during the first nine months of 2012 was characterized by the ongoing digitization. Digital media achieved significant growth and reached a 34.6 percent share of Group revenues. They also contributed 36.1 percent to Group EBITDA and generated an EBITDA margin of more than 20 percent. The Group as a whole posted a 2.9-percent increase in EBITDA during the reporting period due to the strong growth of the digital media. The national print media maintained their high profitability and generated EBITDA margins of over 20 percent despite the weak development of the advertising market in the third quarter. Total revenues for the first nine months rose 3.9 percent. The Management Board confirmed the full-year guidance and continues to expect another record EBITDA for Axel Springer in 2012.
Axel Springer increased earnings before interest, taxes and depreciation (EBITDA) adjusted for non-recurring effects and effects of purchase price allocations by 2.9 percent to EUR 459.3 million (PY: EUR 446.3 million) during the first nine months. The Group thereby generated an EBITDA margin of 19.1 percent following 19.3 percent for the same period of the previous year. At 23.6 percent the EBITDA margin of the Newspapers National segment remained almost on the previous year’s level. The Magazines National segment posted an EBITDA margin of 21.0 percent. In both segments Axel Springer was able to maintain profitability at a high level despite declining revenues and higher restructuring costs. The EBITDA margin of the Digital Media segment improved more than 3 percentage points to 20.2 percent. The profitability of the Print International segment was adversely affected by ongoing slow economic conditions, especially in Eastern Europe, and by higher restructuring costs. The segment reached an EBITDA margin of 12.8 percent.
During the first nine months total revenues grew by 3.9 percent to EUR 2,407.7 million (PY: EUR 2,318.2 million). With a 21.5 percent increase in revenues the Digital Media segment remained the growth engine of the Group. Print media however posted a market-related decline in revenues. Axel Springer saw total revenues adjusted for consolidation effects rise slightly by 0.4 percent.
Dr. Mathias Döpfner, Chief Executive Officer of Axel Springer AG: “After nine months Axel Springer is well on its way to another record year. Our digital activities, which in part are generating high double-digit margins, are making a continually growing contribution to Group earnings. National newspapers and magazines remained highly profitable despite the economic challenges. But print advertising revenues in particular came in at the lower end of our expectations in the third quarter. We are therefore continuing and intensifying our proven strategy of systematically adapting the structures in our German-language core business to changing consumer behavior and of improving their efficiency. We recently took an important step in this direction when we announced the creation of a joint editorial team for the WELT Group, BERLINER MORGENPOST and HAMBURGER ABENDBLATT.”
The Management Board continues to expect 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 national print business and lower revenues in the international 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 lower earnings in the print business, and substantially higher earnings in the digital business, compared to 2011.
The increasing internationalization of the digital media resulted in a 9.2-percent increase of the Group’s international revenues to EUR 827.2 million (PY: EUR 757.8 million). In the first nine months of the current year Axel Springer thus generated 34.4 percent of its total revenues (PY: 32.7 percent) in international markets.
Group advertising revenues improved by 9.0 percent to EUR 1,248.0 million (PY: EUR 1,145.2 million). The driving force here was the growth of the Digital Media Segement, which enjoyed a significant increase in advertising revenues. The digital media share of Group advertising revenues rose to 55.5 percent. Print advertising revenues declined as the result of difficult advertising markets at home and abroad.
Circulation revenues declined by 3.3 percent to EUR 879.0 million (PY: EUR 908.9 million). The reason for this was the decline in circulation of various publications in all three print segments.
Other revenues rose 6.3 percent to EUR 280.8 million (PY: EUR 264.1 million). This was also driven mainly by increases in revenues generated by digital media.
Consolidated net income adjusted for significant, non-operating effects for the first nine months came to EUR 256.9 million (PY: EUR 259.6 million). This corresponds to adjusted earnings per share of EUR 2.21 compared to EUR 2.30 for the same period of the previous year. Consolidated net income of EUR 188.7 million was below the previous year’s figure (EUR 233.2 million). Among other things, this was due to a higher level of depreciation as well as to exceptional items in the financial result. Earnings per share amounted to EUR 1.62 (PY: EUR 2.11).
The Newspapers National segment held the EBITDA margin in the first nine months at 23.6 percent which was almost on the previous year’s level. National newspaper revenues declined by 2.0 percent to EUR 836.7 million (PY: EUR 854.1 million). Both circulation and advertising revenues fell more than 2 percent. The segment EBITDA declined from EUR 203.6 million to EUR 197.2 million partly due to higher restructuring expenditures.
National magazines also remained highly profitable with an EBITDA margin of 21.0 percent (PY: 23.2 percent) despite a decline in revenues. Revenues in the Magazines National segment dropped 4.0 percent to EUR 339.0 million (PY: EUR 353.1 million). Part of the decline especially in the third quarter is attributed to the calendar-related lower number of publishing days compared to the same period of the previous year. Circulation revenues fell 3.1 percent due to a decline in circulation, advertising revenues were 8.7 percent below last year’s figure. The Magazines National segment posted an EBITDA of EUR 71.0 million (PY: EUR 82.1 million). This decline in EBTIDA is due primarily to restructuring costs.
The development of business in the Print International segment was, as before, impacted by the poor economic conditions in important international markets, especially in Eastern Europe. Segment revenues in the first nine months declined 8.6 percent to EUR 320.0 million (PY: EUR 350.0 million). The decline in revenues adjusted for consolidation and currency effects amounted to 6.0 percent. Circulation revenues fell by 6.2 percent – adjusted to 3.6 percent. The decline in advertising revenues was 12.8 percent, adjusted 10.5 percent. The EBITDA of the Print International segment came in at EUR 41.1 million following EUR 56.8 million for the same period of the previous year. The EBITDA margin dropped from 16.2 percent to 12.8 percent.
With a sharp 21.5-percent jump in revenues to EUR 823.3 million (PY: EUR 677.7 million) the Digital Media segment remained the growth engine of the Group. Advertising revenues made the largest contribution with a 24.5-percent increase while other revenues grew 7.7 percent. The increase of segment revenues was attributed to consolidation effects as well as organic growth of 10.8 percent. Digital Media also saw its EBITDA margin rise from 16.5 percent to 20.2 percent in the first nine months. At EUR 165.9 million the EBITDA was 48.3 percent higher than the previous year’s figure of EUR 111.9 million.
The digital pillar Content Portals & Other Digital Media encompasses brand-related portals such as BILD.de, DIE WELT Online, aufeminin.com and azet.sk, as well as digital business models such as idealo, kaufDA and Smarthouse. In the first nine months the pillar saw revenues jump 25.2 percent to EUR 261.7 million (PY: EUR 209.0 million). Their EBITDA for the same period rose 23.7 percent to EUR 57.1 million (PY: EUR 46.1 million). The pillar Journalistic Portals & Other Digital Media thus posted an EBITDA margin of 21.8 percent (PY: 22.1 percent).
The second pillar, Performance Marketing, covers the activities of the Zanox Group, Europe’s leading network for performance based marketing. The pillar enjoyed a 4.6 percent increase in revenues to EUR 326.6 million (PY: EUR 312.1 million). At EUR 15.9 million the EBITDA remained below the previous year’s figure (EUR 18.5 million) as the result of economic developments and investments in further growth. The EBITDA margin correspondingly was 4.9 percent (PY: 5.9 percent).
The pillar Axel Springer Digital Classifieds, which includes the classified portals SeLoger, Immonet, StepStone and Totaljobs, developed especially dynamically during the first nine months. Its revenues rose by 50 percent to EUR 234.9 million (PY: EUR 156.6 million). The EBITDA improved by 86.5 percent to EUR 101.8 million (PY: EUR 54.6 million). With an EBITDA margin of 43.3 percent (PY: 34.9 percent) the classified portals were among the most profitable units of the Group.
The Services/Holding segment posted a 6.6-percent increase in revenues to EUR 88.8 million (PY: EUR 83.3 million) and an EBITDA of EUR -16.0 million (PY: EUR -8.1 million). The result reflects in particular higher share price-related effects of the share-based compensation program.
Free cash flow in the first nine months rose 9.7 percent to EUR 286.0 million (PY: EUR 260.7 million). Net debt declined from EUR 472.8 million at the end of 2011 to EUR 198.8 million as of September 30, 2012. Following the successful placement of a promissory note in the second quarter, Axel Springer successfully concluded in September 2012 an agreement for the refinancing of a line of credit which will expire in August 2013. The Group thus continues to have sufficient funds for the long-term financing of organic and external growth.
The solid financial situation of the Group is reflected in the equity ratio at the end of September 2012 of 50.1 percent. As a result of organic growth and the integration of newly acquired companies in the digital media field, the average number of employees rose to13,504 over 12,779 for the same period of the previous year.
This press release (also in German), Group key figures and the Quarterly Financial Report can be downloaded from www.axelspringer.com/9-m-2012