NEWS IN ENGLISH | Axel Springer starts the financial year with strong earnings growth
Axel Springer starts the financial year with strong earnings growth
2016-05-11 12:36:00

EBITDA increased by 5.2 percent / Despite deconsolidation effects, revenues grew by 0.4 percent / Forecast confirmed / Aggregated user data: Axel Springer reaches 200 million unique users worldwide / Funke Mediengruppe made an early reimbursement of the vendor loan of EUR 260.3 million in the second quarter

During the first three months of the 2016 financial year, Axel Springer profited once again from the growth momentum of its digital business models. They increased their contribution to total revenues to 67 percent and generated 72 percent of the Group's EBITDA. The increasing internationalization of the digital activities also resulted in the share of international revenues increasing slightly to approximately 48 percent of total revenues. At EUR 783.4 million, the Group's total revenues increased by 0.4 percent (PY: EUR 780.6 million). During the first quarter, these were noticeably affected by deconsolidation effects. These included, amongst others, the transfer of the Swiss activities to Ringier Axel Springer Schweiz AG, whose revenues are no longer consolidated with Axel Springer, as well as the sale of Talpa Germany and Smart AdServer. Adjusted for consolidation and currency effects, Axel Springer recorded an increase in revenues of 4.6 percent.

The earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for non-recurring effects, improved by 5.2 percent, compared to the prior year quarter, to EUR 125.9 million (PY: EUR 119.8 million). A significant increase in Classified Ad Models was a major factor driving this improvement. The EBITDA margin improved from 15.3 percent to 16.1 percent. Based on the development during the first quarter, Axel Springer keeps the forecast published in the Annual Report at the beginning of March 2016 unchanged.

Digital reach: 200 million unique users worldwide

The strong position of Axel Springer's digital activities is supported by aggregated figures for the group's digital reach: During the first quarter, and taking into account all digital platforms, the company attained 200 million unique users worldwide as a monthly average (comScore/internal calculations). The average monthly number of visits totaled 1.4 billion and, in addition, 1.1 billion videos were viewed.

Dr. Mathias Döpfner, Chief Executive Officer of Axel Springer SE, comments: "During the first quarter, we made good progress with the implementation of our digital growth projects. With our digital offerings we are reaching 200 million users worldwide. Three quarters of our users can be attributed to our journalistic brands. We want to continue expanding this strong reach."

Digital growth projects pushed forward

During the first quarter, Axel Springer in particular continued to advance the further development of its digital growth projects Business Insider and Upday, as well as the US business of the Bonial Group. Following the successful test phase, the full version of the Upday platform for aggregated news content was launched end of February in Germany, France, Great Britain and Poland. The Group also experienced growth in the area of its journalistic Paid Models. With a total of 394,000 paying digital subscribers (IVW Paid Content 03/2016) the services of BILD and DIE WELT recorded growth yet again.

Following the close of the quarter, @Leisure Group, a leading operator of online agency portals for vacation properties in Europe that is majority-owned by Axel Springer, acquired the controlling interest in Traum-Ferienwohnungen GmbH, which has its registered office in Bremen. Following the acquisition of the booking-platforms operator, @Leisure Group now houses all of its agency service types, for arranging vacation houses and apartments, under one roof.

The expansion of digital business, as well as the acquisitions, has lead to the average number of employees increasing, during the reporting period, by 2.0 percent to 14,886 (PY: 14,595).

Net income well above the prior year

The net income adjusted for non-recurring effects as well as amortization and impairments from purchase price allocations improved by 13.3 percent to EUR 65.3 million (PY: EUR 57.6 million). Axel Springer therefore achieved adjusted earnings per share of EUR 0.53 compared to EUR 0.44 in the prior year. The net income increased significantly during the reporting period, from EUR 43.0 million to EUR 209.4 million. The major factors contributing to this were the one-time effects of the transfer of the Swiss business operations into the newly founded joint venture with Ringier in Switzerland, which was completed in early 2016, and the result from the sale of CarWale in India. The earnings per share consequently rose to EUR 1.88 (PY: EUR 0.32).

Reduction of net debt / Early reimbursement of vendor loan by Funke Mediengruppe during the second quarter

During the first three months of the year, the free cash flow decreased by 6.4 percent to EUR 66.4 million (PY: EUR 70.9 million). The net debt decreased from EUR 1,066.6 million at the end of 2015 to EUR 902.4 million, as of March 31, 2016. At quarter end, EUR 558.0 million (December 31, 2015: EUR 618.0 million) of the existing long-term credit facility, amounting to EUR 1,500.0 million, were taken as drawdowns. At the end of March, Axel Springer's equity ratio was 41.4 percent (PY: 38.6 percent).

Following the close of the quarter, the Funke Mediengruppe made full early repayment, on April 29, 2016, of the vendor loan for the acquisition of the regional newspapers as well as the program guides and women's magazines in 2014, in the amount of approximately EUR 260.3 million, including interest, to Axel Springer. At the end of April, Axel Springer's net debt, after repayment of the vendor loan and distribution of the dividend was approximately EUR 881 million.

Summary of developments in operating segments

During the first quarter, the Classified Ad Models segment increased revenues by 20.9 percent to EUR 212.9 million (PY: EUR 176.2 million). In addition to the strong organic growth of 10,3 percent, the consolidation effects, arising in particular from the integration of Immowelt, also contributed to this increase. The EBITDA of the segment once again increased considerably by 18.4 percent to EUR 83.2 million (PY: EUR 70.2 million). After adjustment for consolidation effects, the Classified Ad Models recorded an EBITDA increase of 11.7 percent. With an EBITDA margin of 39.1 percent (PY: 39.9 percent), the segment remained highly profitable.

The revenues from the Paid Models segment were EUR 340.8 million during the first three months and were therefore 5.5 percent lower than the prior year (EUR 360.7 million). After adjustment for consolidation effects, which can be mainly attributed to the deconsolidation of the Swiss business operations, the revenues decreased by only 1.1 percent. The EBITDA for the Paid Models declined by 14.7 percent in the reporting period, to EUR 37.1 million (PY: EUR 43.5 million). The major factor contributing to this was the planned growth investment in Business Insider and Upday and, without this factor, earnings would have increased slightly. Earnings from national offers improved, particularly in the case of the BILD and WELT Group. The segment's EBITDA margin was 10.9 percent, a decrease from 12.1 percent in the prior year.

At EUR 210.5 million, the first-quarter revenues from the Marketing Models segment were 3.9 percent below the prior-year value (EUR 219.0 million). This downward development is attributable solely to the sale of Talpa Germany and Smart AdServer. Adjusted for consolidation effects, the segment generated a 4.4 percent growth in revenues. The EBITDA for the Marketing Models decreased by 11.7 percent during the reporting period to EUR 19.5 million (PY: EUR 22.1 million). Critical to this were, amongst others, the planned increase in expenditure for the development of the Bonial Group's business in the USA. The EBITDA margin was therefore 9.3 percent (PY: 10.1 percent).

Source: Axel Springer