Consolidated revenues up 1.8 percent from the year-ago figure / EBITDA margin comes to 16.5 percent / Axel Springer drives forward with its transformation to become the leading digital media group
Axel Springer’s performance in the first quarter of 2013 was boosted by the significant revenue and earnings growth of its Digital Media. The segment extended its position as the Group’s biggest operating segment by increasing its revenues by 20.9 percent over the year-ago figure. The growth of Axel Springer’s digital media activities was especially strong in the international markets. Furthermore, the EBITDA of the Digital Media segment rose by 33.9 percent to EUR 62.8 million, that being the highest earnings contribution of all the segments. Amid an economically challenging environment, consolidated revenues rose by 1.8 percent to EUR 803.6 million (PY: EUR 789.0 million). As expected, consolidated EBITDA fell by 3.0 percent to EUR 132.4 million (PY: EUR 136.5 million), due to heightened investments in the accelerated digitization of the Group and the decrease in print media revenues, due to market conditions. However, Axel Springer’s profitability remained on a high level, with an overall EBITDA margin of 16.5 percent. Against the background of the accelerated digitization strategy announced in early March 2013, the Executive Board reaffirmed its expectations for the full year.
Dr. Mathias Döpfner, Chief Executive Officer of Axel Springer AG: “The strong revenue and earnings growth of the Digital Media segment confirms us that accelerating the digital transformation of Axel Springer is the right course. The Digital Media segment is not only the highest revenue contributor, but the highest earnings contributor as well. We are working hard in all areas of the company to complete the transformation to becoming the leading digital media group. As announced earlier, our full-year earnings in 2013 will be weighed down by heightened investments in the digitization of our business and by structural adjustments in the print business.”
As expected, consolidated earnings before interest, taxes, amortization and depreciation (EBITDA), adjusted for non-recurring effects, were influenced by the accelerated transformation of the Group’s business. Thus, Axel Springer’s first-quarter EBITDA of EUR 132.4 million was 3.0 percent less than the corresponding year-ago figure (PY: EUR 136.5 million). That corresponds to an EBITDA margin of 16.5 percent, as compared to 17.3 percent in the first quarter of last year. The biggest contributor to earnings was the Digital Media segment, the EBITDA of which rose to EUR 62.8 million (PY: EUR 46.9 million), reflecting an EBITDA margin of 19.7 percent (PY: 17.8 percent). On the other hand, the earnings performance of our German print media activities was affected by lower revenues, due to market conditions and calendar effects, and by slightly higher restructuring expenses compared to the year-ago period. Nonetheless, the profitability of Axel Springer’s German print media remained on a high level, with a 19.7 percent (PY: 23.4 percent) EBITDA margin of the Newspapers National segment and a 19.5 percent (PY: 21.1 percent) EBITBA margin of the Magazines National segment. Amid persistently difficult economic conditions in the international markets, the Print International segment generated an EBITDA margin of 10.3 percent (PY: 11.4 percent).
In the first quarter, Axel Springer increased its consolidated revenues by 1.8 percent to EUR 803.6 million (PY: EUR 789.0 million). Thanks to the dynamic growth of revenues in the Digital Media segment, which resulted both from organic growth and the consolidation of newly acquired companies, Axel Springer was able to more than offset the expected decrease in print media revenues. Adjusted for consolidation and currency effects, the Group’s total revenues were 2.7 percent less than the corresponding year-ago figure.
Assuming that the structurally declining trends of the print business do not worsen considerably, the Executive Board continues to anticipate a lower single-digit percentage increase in Group-wide total revenues in financial year 2013. The Executive Board anticipates that the expected decrease in circulation revenues will be more than offset by the expected increase in advertising revenues, coupled with stable other revenues. The Executive Board anticipates organic growth in the Group’s digital media activities, reinforced by acquisition effects, whereas the revenues generated in the Group’s national and international print business will be less than the respective prior-year figures, due to market conditions. As a result of heightened investments in the accelerated digitization of the Group’s business and significant expenditures for structural adjustments in the print business, Axel Springer anticipates a single-digit percentage decrease in consolidated EBITDA for the full year 2013.
In the first three months of 2013, Axel Springer generated 37.3 percent (PY: 33.4 percent) of its total revenues in its international activities. In a reflection of the growing internationalization of digital activities, international revenues rose by 13.8 percent to EUR 300.0 million (PY: EUR 263.5 million).
Thanks to strong advertising growth in its digital media activities, Axel Springer generated total advertising revenues of EUR 434.8 million in the first quarter of 2013 (PY: EUR 399.6 million), reflecting an increase of 8.8 percent over the corresponding year-ago figure. Nearly two thirds (63.5 percent) of the Group’s total advertising revenues were contributed by the Digital Media segment. By contrast, the advertising revenues of the print segments were lower than the respective year-ago figures.
At EUR 276.8 million, circulation revenues were 5.8 percent less than the year-ago figure (EUR 293.8 million). This decrease resulted from the shrinking circulation numbers of various titles in all three of the Group’s print segments, due to market conditions.
The other revenues of EUR 91.9 million were 3.9 percent less than the year-ago figure (EUR 95.6 million). In this respect, the increases in the Print International and Magazines National segments were not enough to fully offset the decreases in the Digital Media and Newspapers National segments.
At EUR 72.3 million, Axel Springer’s consolidated net income for the first quarter was 5.6 percent higher than the year-ago figure of EUR 68.5 million. Adjusted for significant non-operating effects, consolidated net income amounted to EUR 65.6 million (PY: EUR 77.5 million). Earnings per share improved by 3.3 percent, from EUR 0.62 to EUR 0.64, while adjusted earnings per share declined from EUR 0.68 to EUR 0.54.
The Digital Media segment contributed the highest share of revenues and earnings to the Group’s performance in the first quarter of 2013, underscoring the strategic importance of these activities for Axel Springer. Revenue growth was especially strong in the international markets. The total segment revenues of EUR 318.2 million were 20.9 percent higher than the year-ago figure (EUR 263.1 million). This increase was driven both by organic growth and by consolidation effects related to Totaljobs, Onet.pl, Immoweb.be, and meinestadt.de, among other acquisitions. The Digital Media segment generated organic growth of 6.6 percent in the first three months of 2013. Advertising revenues, which rose by 27.1 percent to EUR 276.0 million (PY: EUR 217.3 million), were particularly important for the positive performance of the Digital Media segment. Due in particular to deconsolidation effects, other revenues declined from EUR 45.8 million in the first quarter of last year to EUR 42.1 million in the quarter just ended. At EUR 62.8 million, the EBITDA of the Digital Media segment was 33.9 percent higher than the year-ago figure (EUR 46.9 million) and accounted for approximately 47 percent of the Group’s consolidated EBITDA. Furthermore, the segment’s EBITDA margin improved from 17.8 percent to 19.7 percent.
The first pillar of the Digital Media segment, Content Portals & Other Digital Media, encompasses brand-derived online portals such as BILD.de, DIE WELT Online, aufeminin.com, and Onet.pl, as well as other digital business models such as idealo, kaufDA, and Smarthouse. This pillar exhibited a very positive development in the first quarter, with revenues rising by 24.9 percent to EUR 103.7 million (PY: EUR 83.0 million). EBITDA rose by 24.3 percent to EUR 19.7 million. The EBITDA margin remained stable at 19.0 percent (PY: 19.1 percent).
The second digital pillar of Performance Marketing comprises the business of the Zanox Group, the leading network for performance-based online marketing in Europe. At EUR 115.0 million, revenues were slightly higher, by 1.3 percent, than the corresponding year-ago figure (EUR 113.6 million). The EBITDA of the pillar of EUR 5.0 million was less than the year-ago figure (EUR 5.8 million). The EBITDA margin came to 4.4 percent, as compared to 5.1 percent in the first quarter of last year.
The third digital pillar, Axel Springer Digital Classifieds, which includes the classified portals SeLoger, Immonet, Immoweb.be, StepStone, Totaljobs, and meinestadt.de, performed especially well in the first quarter of 2013. The revenues of EUR 99.4 million were roughly 50 percent higher than the year-ago figure (EUR 66.4 million). With an EBITDA of EUR 40.9 million (PY: EUR 28.9 million), the classified portals made the highest contribution to the EBITDA of the Digital Media segment. This performance was aided both by organic growth and by the consolidation of new companies. The EBITDA margin for the first three months came to 41.1 percent (PY: 43.5 percent). The slight decrease in the EBITDA margin resulted entirely from the lower profit margins of new acquisitions, while the EBITDA margins of the existing portfolio rose further.
Despite lower revenues, the Newspapers National segment generated a high EBITDA margin of 19.7 percent (PY: 23.4 percent). The revenues of the German newspapers fell by 9.7 percent to EUR 249.3 million (PY: EUR 275.9 million). As a result of lower circulation numbers due to market conditions and fewer selling days compared to the first quarter of last year, circulation revenues were 7.8 percent less than the corresponding year-ago figure. Adverse calendar effects also influenced advertising revenues, which fell by 12.3 percent from the first quarter of last year. Segment EBITDA declined from EUR 64.6 million to EUR 49.2 million, due to lower revenues and slightly higher restructuring expenses.
The Magazines National segment also remained highly profitable, with an EBITDA margin of 19.5 percent (PY: 21.1 percent). The segment revenues of EUR 112.1 million were slightly less than the year-ago figure (EUR 115.5 million). Circulation revenues were 2.5 percent less than the year-ago figure, due to the mostly lower circulation numbers. Advertising revenues were 6.4 percent less than the year-ago figure. Segment EBITDA amounted to EUR 21.9 million (PY: EUR 24.4 million).
The business performance of the Print International segment reflected the persistently difficult economic conditions in the international markets. The segment revenues of EUR 96.1 million were 8.1 percent less than the year-ago figure (EUR 104.6 million). This decrease resulted from the fewer number of publication days, due to calendar effects, and from currency effects. Adjusted for currency effects, segment revenues were 7.4 percent less than the corresponding year-ago figure. Circulation revenues were 5.1 percent lower, and adjusted for currency effects, they were 4.5 percent lower than the respective year-ago figures. Advertising revenues were 20.7 percent lower, and adjusted for currency effects, they were 20.0 percent lower than the respective year-ago figures. The EBITDA of the Print International segment amounted to EUR 9.9 million (PY: EUR 11.9 million). Because the revenue decreases were largely offset by cost reductions, the EBITDA margin declined only slightly, from 11.4 percent to 10.3 percent.
At EUR 27.9 million, the revenues of the Services/Holding segment were 6.8 percent less than the year-ago figure (PY: EUR 30.0 million). The EBITDA of EUR -11.4 million was on the level of the year-ago figure (EUR -11.4 million).
At EUR 77.7 million, the free cash flow generated in the first three months of 2013 was 28.2 percent less than the year-ago figure (EUR 108.3 million). Axel Springer reduced its net debt from EUR 449.6 million at year-end 2012 to EUR 320.7 million at March 31, 2013. In addition to promissory note loans in the total nominal amount of EUR 500,0 million, Axel Springer has access to available credit facilities in the amount of EUR 920.0 million. Thus, Axel Springer has sufficient resources to successfully implement the transformation and accelerated digitization of its business. The Group’s equity ratio improved from 46.9 percent in the first quarter of last year to 49.2 percent. Due to higher staffing levels in the Digital Media segment, which resulted in large part from consolidation effects, the average workforce rose to 14,614 (PY: 13,294).
This press release (also in German), the Group’s key figures and the quarterly financial report can be downloaded from www.axelspringer.com/q-1-2013.