Axel Springer significantly increases earnings in the third quarter




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04.11.15

Axel Springer significantly increases earnings in the third quarter

To press release overview

Revenues 8.9 percent above prior year after nine months / EBITDA increases by 8.8 percent / Strengthened market position in the English-speaking world / Increased revenue forecast for the whole year

On the basis of the development in the first nine months, Axel Springer is increasing its revenue forecast for the whole year and confirms the EBITDA forecast. During the first nine months, Axel Springer benefited from the continuous dynamic development of its digital activities. They contributed more than 60 percent to the total revenues and more than 70 percent to the EBITDA. Overall, Axel Springer increased the total revenues by 8.9 percent between January and September. The EBITDA rose by 8.8 percent during the nine-month period. With an EBITDA margin of 16.7 percent, Axel Springer remained highly profitable.

The EBITDA increased significantly during the third quarter and was 32.2 percent above the prior year value. Alongside the Classified Ad Models, the Paid Models also contributed to this with an EBITDA growth of 25.2 percent. Total revenues grew by 7.3 percent in comparison to the prior year quarter.

Dr. Mathias Döpfner, Chief Executive Officer of Axel Springer SE: “Our priority this year is growth. We see great potential with our Classified Ad Models and journalistic brands in Europe and also, increasingly, in the English-speaking world. Through the acquisition of Business Insider, Axel Springer has, already being the market leader in Europe in terms of reach, developed into one of the biggest digital publishers in the world.”

In the first nine months of the year, Axel Springer systematically implemented its strategy to invest more in digital journalistic offerings. A significant milestone was the majority acquisition of Business Insider, which was announced in September and closed in October. Business Insider is the leading digital offering for business and financial news in the USA. In September, Axel Springer also agreed on an innovative partnership with Samsung for the development of new digital media formats. Axel Springer and Samsung presented the first result of the partnership, the beta version of UPDAY – a content platform for aggregated and curated news content, which is to start in full in 2016.

Details of Group results

In the first nine months, Axel Springer increased the total revenues by 8.9 percent from EUR 2,177.9 million to EUR 2,372.7 million. Adjusted for consolidation and currency effects, the total revenues increased slightly by 1.0 percent. The earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for non-recurring effects, grew by 8.8 percent from EUR 363.9 million to EUR 396.0 million. The Group held the EBITDA margin at a high level of 16.7 percent, as in the prior year.

At EUR 198.8 million, net income adjusted for non-recurring effects and purchase price allocations improved by 6.9 percent (PY: EUR 186.0 million). Axel Springer therefore achieved adjusted earnings per share of EUR 1.60 compared to EUR 1.47 in the prior year. At EUR 257.9 million, net income increased by 12.7 percent in the reporting period compared to EUR 228.9 million in the prior year. The earnings per share consequently rose to EUR 2.20 (PY: EUR 1.78). The sale of Runtastic particularly contributed to the sharp increase in net income by 68.2 percent in the third quarter to EUR 146.9 million.

As a result of the development of digital business and through acquisitions, the average number of employees increased by 11 percent in the reporting period to 14,908 (PY: 13,428).

Revenue forecast for the whole year increased, EBITDA forecast confirmed

Following the revenue development during the first nine months, the Executive Board now expects that in 2015 total revenues will rise by an amount in the mid single-digit percentage range, whereas previously an increase by an amount in the low to mid single-digit percentage range had been expected. It assumes that the planned increase in advertising revenues will probably more than compensate for the declining circulation revenues and other revenues. The Executive Board continues to expect the EBITDA to rise in the high single-digit percentage range. In doing so, a rise in EBITDA in the Classified Ad Models and Services/Holding segments is expected, whilst the EBITDA of Paid Models and Marketing Models is likely to be below the level of the prior year. For the adjusted earnings per share the Executive Board expects, due to a lower proportion of adjusted net income that is due for minorities, an increase in the low double-digit percentage range compared to the prior-year figure.

Digital business models continue to increase in Germany and abroad

In the first nine months, the Group’s growth was driven by the continuous dynamic development of the digital business models in Germany and abroad. The pro-forma revenues of digital activities rose from EUR 1,271.6 million in the prior year to EUR 1,404.9 million. This amounts to an organic growth of 10.5 percent.

Axel Springer successfully continued its international expansion of digital business models. International revenues recorded a rise of 21.8 percent to EUR 1,128.3 million accordingly (PY: EUR 926.6 million). Thus, Axel Springer generated 47.6 percent in the first nine months (PY: 42.5 percent) of the total revenues in international markets.

Also with advertising revenues, the company benefited from the positive growth dynamic of digital activities. They rose by 16.1 percent in the reporting period to EUR 1,484.7 million (PY: EUR 1,278.3 million.). Of the total advertising revenues, 80.9 percent were generated through digital activities.

As a result of the structural declines within the print business, total circulation revenues of EUR 542.3 million were below the prior year value (EUR 557.2 million) by 2.7 percent, as expected. Other revenues rose slightly by 1.0 percent to EUR 345.7 million (PY: EUR 342.4 million).

Substantial growth in revenues within the Classified Ad Models and Marketing Models

At EUR 547.5 million, the revenues from the Classified Ad Models segment increased by 53.3 percent (PY: EUR 357.1 million). In addition to strong organic growth, consolidation effects from the first-time incorporation of @Leisure, LaCentrale, Jobsite and Yad2, and also Immowelt as of July 1, 2015, were noticeable. In September, Yad2 strengthened its position on the Israeli market for online job exchanges by purchasing a 70 percent share in Drushim, one of the leading job ad portals in Israel. The organic growth of the Classified Ad Models was 13.4 percent in the first nine months on a pro-forma basis.

The EBITDA of the Classified Ad Models segment considerably rose again by 40.8 percent to EUR 225.7 million (PY: EUR 160.2 million) and therefore contributed the most to the total earnings. Adjusted for consolidation effects, the EBITDA rose by 18.3 percent. With an EBITDA margin of 41.2 percent (PY: 44.9 percent), the segment remained highly profitable. The Job sector generated an EBITDA margin of 44.9 percent, the Real Estate sector 48.5 percent, and the General/Other sector 26.9 percent.

Revenues in the Paid Models segment were EUR 1,095.4 million in the first nine months and therefore below the prior year value (EUR 1,129.4 million) by 3.0 percent. Adjusted for consolidation effects, revenues fell by 4.8 percent in the first nine months. Compared to a very strong prior year value due to the Soccer World Cup and a special edition of BILD, the segment’s advertising revenues declined by 6.1 percent. Due to the decrease in print revenues related to market trends, circulation revenues of Paid Models declined by 2.8 percent. The segment’s other revenues rose by 9.7 percent, which is predominantly due to the incorporation of N24. Adjusted for these consolidation effects, they grew by 2.6 percent.

Compared to the monthly average of last year’s third quarter, the number of digital subscribers grew by 25 percent in Q3/2015. In September 2015, the number of digital subscribers of BILD and DIE WELT increased to a total of more than 362,000. Of these, more than 292,000 were to BILD and almost 70,000 to DIE WELT (IVW Paid Content 9/2015).

The EBITDA for the Paid Models fell in the reporting period by 19.1 percent to EUR 137.8 million (PY: EUR 170.2 million). In addition to operative decline in revenues, increased restructuring costs in particular had an influence. As a result, the EBITDA margin of the segment fell to 12.6 percent (PY: 15.1 percent). The EBITDA for the Paid Models rose in the third quarter by 25.2 percent compared to the corresponding quarter of the prior year.

The revenues in the Marketing Models increased by 12.0 percent in the first nine months to EUR 632.7 million (PY: EUR 564.9 million). The segment’s advertising revenues recorded an increase of 10.6 percent, to which Performance Marketing as well as Reach Based Marketing both contributed. The growth of the other revenues by 18.5 percent was also due to the growth in both areas of the segment, Performance Marketing and Reach Based Marketing.

Whilst the EBITDA of Performance Marketing slightly increased, results of Reach Based Marketing were below the prior-year figure due to higher expenses to strengthen the competitiveness of idealo, portfolio realignments at aufeminin and expenses for the internationalization of the Bonial Group. The segment’s EBITDA consequently fell by 13.9 percent to EUR 66.1 million (PY: EUR 76.8 million). The EBITDA margin was 10.4 percent (PY: 13.6 percent).

Revenues from the Services/Holdings segment declined by 23.2 percent in the reporting year to EUR 97.1 million due to market trends (PY: EUR 126.5 million.). The segment’s EBITDA increased to EUR -33.5 million compared to EUR -43.3 million in the prior year.

Significant growth of free cash flow

At EUR 184.2 million, Axel Springer increased its free cash flow by 23.6 percent in the first nine months (PY: EUR 149.0 million). The net debt amounted to EUR 803.5 million as of September 30, 2015, compared to EUR 667.8 million at the end of 2014. As of September 30, 2015, the Group had unutilized short-term and long-term credit facilities amounting to EUR 1,157.0 million (December 31, 2014: EUR 511.0 million). As of the reporting date, the company’s equity ratio was 40.8 percent (PY: 42.4 percent).

This press release, the Group Key Figures and the Quarterly Financial Report are available in German and English at http://www.axelspringer.com/q-3-2015
Press Contact Axel Springer SE:
Michael Schneider

Tel: +49 30 2591 77644