Revenues grew by 8.4 percent / EBITDA increased by 11.6 percent / Planned dividend of EUR 1.80 per share / Sustained growth in revenues and earnings expected in 2015
During the 2014 financial year Axel Springer succeeded in achieving all economic and strategic objectives, whilst rapidly digitizing its activities. The company profited from strong market positions of its digital products and increased revenues in all segments. The 11.6 percent increase in Group EBITDA was driven predominantly by the profitable growth of the digital activities, which increased their share of Group EBITDA to 72.1 percent and their contribution to Group revenues to 53.2 percent. The EBITDA margin of the Group improved from 16.2 percent to 16.7 percent. The Executive Board and Supervisory Board will propose a stable dividend of EUR 1.80 per share for the 2014 financial year at the annual shareholders' meeting.
Dr. Mathias Döpfner, Chief Executive Officer of Axel Springer SE: "Our company has undergone significant changes, both structurally and culturally. Axel Springer is today truly a digital publisher. During the course of this year, we will further invest consistently in the digital expansion."
With revenues growth of 8.4 percent to EUR 3,037.9 million (PY: EUR 2,801.4 million) Axel Springer achieved its forecast for the 2014 financial year. All segments of the Group contributed to this increase. Adjusted for consolidation and currency effects, Group revenues increased by 2.8 percent. Group EBITDA improved by 11.6 percent to EUR 507.1 million (PY: EUR 454.3 million) compared to the previous year. Thereby Axel Springer profited from increasing earnings contributions from digital activities, and Classified Ad Models in particular.
Consolidated net income increased by 31.9 percent to EUR 235.7 million compared to the prior-year figure (EUR 178.6 million). Beside the positive operating development, the gain of disposal of the minority shareholding in the real estate portal iProperty.com had also a positive impact. When adjusted for non-recurring effects, consolidated net income increased from EUR 229.8 million to EUR 251.2 million. The adjusted earnings per share correspondingly improved by 11.2 percent from EUR 1.81 to EUR 2.01. The average number of employees increased due to the expansion of digital activities and acquisitions to 13,917 (PY: 12,843).
The Executive Board expects sustained growth in revenues and earnings for the 2015 financial year. It expects an increase in total revenues within a low to mid single-digit percentage range. The Executive Board assumes that the planned increase in advertising revenues will more than compensate for the fall in circulation revenues and other revenues. The Executive Board expects EBITDA to rise by an amount in the high single-digit percentage range. For the adjusted earnings per share, due to a lower proportion of the adjusted consolidated net income that is due for minorities, an increase in the low double-digit percentage range compared to the prior-year figure is expected.
Axel Springer profited considerably from the rapid digitization of the Group during 2014. The pro-forma revenues from digital activities increased to EUR 1,705.8 million compared to the prior-year figure (EUR 1,568.6 million). Organic growth of digital media activities was therefore 8.7 percent.
The Group also systematically continued with its international expansion of digital activities. As a consequence, Axel Springer's international revenues increased by 12.4 percent to EUR 1,309.3 million (PY: EUR 1,164.4 million). The company generated 43.1 percent of its revenues outside Germany (PY: 41.6 percent).
Due to the growth of digital media, advertising revenues increased significantly, whilst circulation revenues remained below those of the previous year in line with expectations. All operating segments contributed to the 10.8 percent rise in advertising revenues to EUR 1,815.1 million (PY: EUR 1,637.8 million). Classified Ad Models and Marketing Models saw particularly pronounced growth. Axel Springer generated approximately three-quarters (74.5 percent) of advertising revenues via digital activities. Predominantly due to consolidation effects, circulation revenues fell by 3.1 percent to EUR 735.3 million (PY: EUR 759.1 million). When adjusted for such effects, circulation revenues only fell by 1.3 percent. Other revenues were characterized, predominantly due to consolidation effects, by strong growth of 20.5 percent to EUR 487.5 million (PY: EUR 404.5 million), which was primarily driven by Paid Models and Marketing Models. Adjusted for such effects, the revenue increase came to 5.1 percent.
Within the Paid Models segment in the previous financial year, the focus was primarily on the implementation of digital paid models with BILD and WELT. These showed continued progress in gaining paid online subscriptions. The number of digital subscribers to BILD increased to more than 253,000, whilst the number of digital subscribers to WELT increased to nearly 58,000 until December. This means that both brands have together over 311,000 digital subscribers. In addition, Axel Springer accelerated the merger of N24 Media GmbH, acquired in February 2014, with the WELT Group to create a multimedia news company for quality journalism. As part of the joint venture with POLITICO, finalized in September, the Group is also developing a new European media portal for political journalism that is supposed to start in spring 2015.
The Paid Models segment increased in revenues by 2.6 percent during the financial year to EUR 1,561.4 million (PY: EUR 1,521.5 million). Adjusted for consolidation effects, revenues were 1.4 percent less than the prior-year figure. Advertising revenues of the segment increased by 1.1 percent, whilst a fall of 3.4 percent was noted when adjusted for consolidation effects. Circulation revenues of Paid Models fell by 3.1 percent. Due to positive effects from price increases and contributions from digital paid models, circulation revenues in Germany remained practically the same (-0.1 percent). Other revenues showed a considerable increase of 57.5 percent. When adjusted for consolidation effects the increase was 8.4 percent in Germany and 16.4 percent internationally. The EBITDA of Paid Models was EUR 244.2 million, below that of the previous year (EUR 250.1 million). The EBITDA margin of the segment was therefore 15.6 percent after being 16.4 percent in the prior year.
In the Marketing Models segment one of the primary focuses was the continued internationalization of kaufDA. Using the Retale.com brand, kaufDA has successfully continued its expansion into the US market and has been able to gain important advertising customers.
The revenues in the Marketing Models segment increased by 10.8 percent in 2014 to EUR 794.1 million compared to the prior-year figure (EUR 716.5 million). The growth of advertising revenues by 10.0 percent played a significant part in this. Other revenues increased by 14.6 percent in the course of the previous financial year. The primary causes of this were the consolidation effects from the acquisition of My Little Paris, which was finalized during the reporting year. Despite higher expenses for establishing new business models and higher restructuring expenses, the segment increased EBITDA by 6.0 percent to EUR 109.7 million (PY: EUR 103.4 million). The EBITDA margin reached 13.8 percent (PY: 14.4 percent).
The Classified Ad Models segment continued its rapid business development and showed in 2014 the strongest levels of growth within the Group once again. To this result contributed the good operative development, international expansion and acquisitions, among them Yad2 and LaCentrale, both leading classified ad portals in their respective markets.
The majority of the Classified Ad Models segment of Axel Springer is bundled within Axel Springer Digital Classifieds GmbH. In December 2014, Axel Springer increased its share in the company from 70 to 85 percent with plans to also acquire the remaining 15 percent (see the press release of December 8, 2014).
For the previous financial year Axel Springer discloses the development of the Classified Ad Models segment in the Jobs, Real Estate, and General/Other sectors for the first time.
In 2014, the Classified Ad Models segment achieved a revenue growth of 27.2 percent to EUR 512.0 million (PY: EUR 402.6 million). This growth was driven by strong organic development as well as via consolidation effects. When adjusted for consolidation effects, revenues increased by 10.7 percent. Advertising revenues generated by the segment increased by 29.0 percent. Other revenues fell by 7.0 percent.
The EBITDA of the segment increased by 35.2 percent to EUR 221.4 million (PY: EUR 163.8 million). In total the EBITDA margin of the segment increased from 40.7 percent in the previous year to 43.2 percent. With EBITDA margins of 45.9 percent (PY: 41.0 percent) in the Jobs sector, 47.8 percent (PY: 45.4 percent) in Real Estate, and 23.9 percent (PY: 12.6 percent) in the General/Other sector, the segment remained highly profitable.
The Services/Holding segment showed revenue growth of 6.1 percent to EUR 170.5 million (PY: EUR 160.8 million). The EBITDA of the segment of EUR -68.2 million (PY: EUR -63.0 million) predominantly resulted from lower reversals of provisions during the reporting year.
In 2014, free cash flow was EUR 244.1 million (PY: EUR 246.1 million), meaning it remained at the same level as the previous year. Net debt increased from EUR 471.3 million at the end of 2013 to EUR 667.8 million as of December 31, 2014. The main reasons for this were the financing of completed acquisitions as part of the digitization and internationalization strategy, and the increase of the majority shareholding in Axel Springer Digital Classifieds. At the end of the year, the Group had access to unutilized short- and long-term credit facilities totaling EUR 511.0 million (as of December 31, 2013: EUR 770.0 million).
Due to the refinancing of the existing Schuldschein (promissory note) in October 2014, Axel Springer was able to improve the average rate of interest and extend the average term. The Group therefore continues to be in a very strong financial position. The equity ratio was 42.4 percent at the end of the 2014 financial year.