Consolidated revenues up 6.2 percent year-on-year / EBITDA up 10.6 percent year-on-year / EBITDA margin rises to 18.5 percent / Digital activities with rising revenue and earnings contributions
In the second quarter of the current financial year, Axel Springer’s operating results continued the dynamic growth trend of the first three months, thanks in large part to consistently strong growth in its digital activities. Consequently, all three operating segments – Paid Models, Marketing Models, and Classified Ad Models – generated higher revenues and earnings in the first half of 2014. Consolidated revenues were 6.2 percent higher than the corresponding figure for the first half of last year, while consolidated EBITDA registered an even greater increase of 10.6 percent. Axel Springer’s EBITDA margin improved to 18.5 percent. The Group’s digital activities accounted for more than 51 percent of consolidated revenues and more than 65 percent of consolidated EBITDA in the first half of 2014.
Dr. Mathias Döpfner, Chief Executive Officer of Axel Springer SE: “The effects of the ongoing transformation are evident. The revenue and earnings contributions of our digital activities are growing, and they are still the main driver of sustainable, profitable growth. The fact that consolidated EBITDA for the first six months of 2014 rose by an amount in the low double-digit percentage range is completely in line with our positive full-year forecast – and we anticipate a much greater increase for our Classified Ad Models.”
Axel Springer’s consolidated revenues of EUR 1,436.8 million were 6.2 percent higher than the corresponding figure for the first half of last year (EUR 1,352.4 million). All segments contributed to this growth. Adjusted for consolidation and currency effects, consolidated revenues were 3.2 percent higher than the year-ago figure.
At EUR 266.1 million, Axel Springer’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for non-recurring effects and purchase price allocation effects, were with a plus of 10.6 percent also considerably higher than the corresponding year-ago figure (EUR 240.7 million). The earnings increase was carried by all three operating segments, with Classified Ad Models making the greatest contribution. The EBITDA margin rose from 17.8 percent to 18.5 percent.
For the full year 2014, the Executive Board continues to expect that total revenues will rise by an amount in the middle single-digit percentage range. It anticipates that lower circulation revenues will be more than offset by higher advertising revenues and other revenues. For the full year 2014, Axel Springer is aiming to increase its EBITDA by an amount in the low double-digit percentage range.
All three operating segments – Paid Models, Marketing Models, and Classified Ad Models – are expected to generate higher revenues. In light of the Classified Ad Models business performance to date, the growth expectations for this segment have been adjusted upward. Therefore, the Executive Board now anticipates a substantial increase in revenues and EBITDA for the full year in this segment, after having predicted a rise in the low double-digit percentage range so far. Whereas in the Paid Models segment a higher EBITDA by an amount in the low to mid single-digit percentage range is expected, the Marketing Models segment EBITDA is expected to be on the level of the prior-year figure, by reason of the planned expenditures for establishing new digital business models.
Axel Springer successfully pursued the accelerated digitization of the company in the first half of 2014. The pro-forma revenues of the Group’s digital media activities rose to EUR 760.5 million, reflecting organic growth of 8.2 percent (PY: EUR 702.7 million).
Thanks to the growing digitization of the Group’s international business, international revenues rose by 8.0 percent to EUR 609.7 million (PY: EUR 564.5 million). Thus, Axel Springer generated 42.4 percent of its total revenues in its international markets (PY: 41.7 percent).
At EUR 855.3 million, advertising revenues were 8.8 percent higher than the year-ago figure (EUR 786.4 million). Also in this respect, Axel Springer benefited from the positive development of its digital activities, which accounted for roughly three quarters (72.8 percent) of total advertising revenues. Due to consolidation effects related to the sale of French print titles in the middle of 2013, the circulation revenues of EUR 364.7 million were 4.4 percent less than the year-ago figure (EUR 381.6 million). The other revenues of EUR 216.7 million were 17.5 percent higher than the year-ago figure (EUR 184.5 million). This increase was driven primarily by gains in the Paid Models and Marketing Models segments.
Compared to the corresponding figure for the first six months of 2013 (EUR 113.3 million), Axel Springer increased its consolidated net income by 24.9 percent to EUR 141.6 million. Accordingly, earnings per share improved to EUR 1.17, as compared to EUR 0.97 in the first half of last year. Adjusted for non-recurring effects, consolidated net income rose to EUR 138.2 million (PY: EUR 122.3 million). Thus, Axel Springer’s adjusted earnings per share amounted to EUR 1.12, as compared to EUR 1.00 in the first half of last year.
The Paid Models segment increased its revenues by 2.8 percent to EUR 760.2 million in the first half of 2014 (PY: EUR 739.6 million). Adjusted for consolidation effects, revenues were little changed (+0.3 percent) from the corresponding year-ago figure. At EUR 364.7 million, the segment’s circulation revenues were 4.4 percent less than the year-ago figure (EUR 381.5 million). Thanks to copy price increases and the rising contribution of digital paid content, German circulation revenues were practically unchanged (-0.4 percent) from the year-ago figure. The segment’s advertising revenues of EUR 329.4 million were 5.0 percent higher than the year-ago figure (EUR 313.7 million). Adjusted for consolidation effects, the increase came to 1.5 percent. This development was particularly influenced by the positive effects of the BILD special issue on the soccer World Cup, and by the higher advertising revenues of digital media and SPORT BILD. The EBITDA of the Paid Models segment rose by 6.1 percent to EUR 132.7 million (PY: EUR 125.1 million). This increase was mainly attributable to the earnings contributions of the newly consolidated companies N24 and Runtastic, as well as lower expenditures for building up new digital business models. The segment’s EBITDA margin improved from 16.9 percent in the first half of 2013 to 17.5 percent in the reporting period.
At EUR 370.8 million, the revenues of the Marketing Models segment were 9.5 percent higher than the figure for the first half of 2013 (EUR 338.6 million). Driven by gains in performance marketing and reach based marketing, the segment’s advertising revenues rose 7.5 percent to EUR 307.3 million (PY: EUR 286.0 million). The 20.6 percent increase in other revenues to EUR 63.5 million (PY: EUR 52.7 million) was mainly carried by gains in reach based marketing. Despite higher expenditures for establishing new business models, the segment’s EBITDA rose by 3.8 percent to EUR 55.3 million (PY: EUR 53.3 million). The EBITDA margin of 14.9 percent was slightly less than the year-ago level (15.7 percent).
At EUR 226.6 million, the revenues of the Classified Ad Models segment were 15.0 percent higher than the corresponding figure for the first half of 2013 (EUR 197.1 million). This increase was driven both by positive operating results and by consolidation effects from Saongroup and YourCareerGroup, and the first-time consolidation of Yad2. Adjusted for these effects, the revenue increase came to 7.4 percent. The advertising revenues of EUR 218.6 million were 17.1 percent higher than the year-ago figure (EUR 186.7 million). Adjusted for consolidation effects, the increase came to 9.2 percent. The segment’s EBITDA of EUR 101.0 million was with a plus of 24.6 percent considerably higher than the year-ago figure (EUR 81.0 million). Compared to the very high level attained in the first half of last year (41.1 percent), the EBITDA margin rose by another 3.5 percentage points to 44.5 percent.
At EUR 79.1 million, the revenues of the Services/Holding segment were moderately higher (+2.7 percent) than the year-ago figure (EUR 77.0 million). The segment’s EBITDA amounted to EUR -22.9 million (PY: EUR -18.7 million).
Free cash flow rose by 1.0 percent to EUR 82.4 million in the first half of 2014 (PY: EUR 81.6 million). Axel Springer reduced its net debt from EUR 471.3 million as of year-end 2013 to EUR 104.4 million as of June 30, 2014. This development was mainly influenced by the receipt of the purchase price from the completed transaction with FUNKE MEDIENGRUPPE in the second quarter. As of June 30, 2014, Axel Springer had access to available short-term and long-term credit facilities in the amount of EUR 920.0 million (December 31, 2013: EUR 770.0 million). Axel Springer can use these funds both for general business purposes and for financing possible acquisitions. The Group’s equity ratio rose from 47.0 percent at the end of financial year 2013 to 53.3 percent at the end of the second quarter. Particularly as a result of acquisitions-driven and organic growth in the Marketing Models and Classified Ad Models segments, the average number of employees rose to 13,295 (PY: 12,859).
This press release (also in German), the Group’s key figures, and the Interim Financial Report can be found at www.axelspringer.com/h-1-2014.