10.11.10

Axel Springer continues on record course: significant growth in revenues and earnings in the first nine months of 2010

November 10, 2010


EBITDA of EUR 385.8 million at new high / EBITDA margin improves to 18.6 percent / Revenues gain 10.0 percent / Continued strong growth of revenues and doubling of earnings in the digital business / Integration of new companies of the Ringier Axel Springer Media joint venture strengthens international position / Management Board confirms anticipated record result for the full year

Following a successful third quarter Axel Springer is now on the home stretch to achieve its record targets for the full year. The company had raised its targets most recently in July 2010. The positive development of business during the first half of the year continued into the third quarter despite the anticipated slight decline in the advertising market following the Soccer World Cup. Both organic growth and the consolidation of new companies contributed significantly to the 10.0-percent increase in revenues for the first nine months. The Group posted record EBITDA of EUR 385.8 million for the nine-month period. All operating segments enjoyed an increase in profitability over the same period of the previous year. The anti-cyclical investments in brands and the growth of the digital and international activities both paid off. Axel Springer also benefited from continued cost discipline and the positive effects of portfolio adjustments on earnings.

The Management Board confirms the anticipation for the full year to reach a significant rise of revenues and EBITDA rise to the level of the all-time high recorded in the fiscal year 2008 (EUR 486.2 million).

During the first nine months of the financial year Axel Springer posted a 45.9-percent increase in earnings before interest, taxes and depreciation (EBITDA) adjusted for non-recurring effects and effects of purchase price allocations to EUR 385.8 million (previous year EUR 264.5 million). The EBITDA margin for the same period improved from 14.0 percent to 18.6 percent. Axel Springer saw revenues adjusted for consolidation effects increase 2.3 percent in the first nine months of 2010. Including consolidation effects Group revenues gained 10.0 percent to EUR 2,075.3 million (previous year EUR 1,886.2 million). In the third quarter Axel Springer for the first time consolidated the Ringier companies which were integrated into the joint venture Ringier Axel Springer Media. The joint venture for the Eastern European business contributed significantly to the increase in revenues and earnings in the segment Print International.

The share of international revenues for the nine-month period grew from 20.0 percent to 26.9 percent of Group revenues. International revenues grew 48.3 percent to EUR 559.2 million (previous year EUR 377.1 million). Besides extended activities in Eastern Europe, acquisitions in the digital business contributed to this increase.

With an increase in revenues of 62.6 percent in the segment Digital Media and a 19.4-percent rise in the segment Print International, the Group was once again able to more than compensate for the revenue decline in the national print media.

Earnings of all operating segments developed nicely. The national newspapers and magazines remained highly profitable with EBITDA margins of more than 20 percent in the first nine months. The strong development of revenues and earnings in the segment Print International led to an increase of the EBITDA margin to 13.0 percent, which is the highest level recorded since the foundation of the segment at the beginning of 2008. EBITDA of the segment Digital Media more than doubled, while the EBITDA margin improved to 11.1 percent.

Dr. Mathias Dopfner, Chief Executive Officer of Axel Springer AG, said: “Axel Springer has again become more digital and more international. And in the German print market our brands with their extensive reach continue to generate strong earnings. At the same time our rapidly growing digital media has improved their earnings significantly. After nine months Axel Springer has already exceeded some of the objectives for the entire year that we set at the beginning of 2010. We are therefore confident that we will achieve the targets that we set in July, namely in the dimension of the record result of 2008.”


Significant increase in advertising revenues – Adjusted net income rose 85.3 percent

Axel Springer posted a 21.4-percent increase in advertising revenues during the first nine months to EUR 965.9 million (previous year EUR 795.4 million). The significant growth of revenues in digital media was responsible for the increase. As the result of the decline in circulation in the print market, circulation revenues decreased by 2.0 percent to EUR 867.0 million (previous year EUR 884.5 million).

Group net income for the reporting period amounted to EUR 257.6 million (previous year EUR 317.0 million). The figures for both the current and previous year contain non-operating effects, especially the profits generated by the divestment of stakes in companies. These effects had a greater influence on last year’s results than they did on this year’s figure. Adjusted for essential non-operating effects Group net income increased by 85.3 percent to EUR 241.0 million (previous year EUR 130.1 million). Earnings per share for the first nine months were EUR 8.12 (previous year EUR 10.47). The adjusted earnings per share of EUR 7.43 were significantly higher than last year’s figure of EUR 4.02.


Segments: Growth of earnings in all operating segments

The segment Newspapers National remained highly profitable with an EBITDA margin of 26.3 percent. Segment revenues declined 1.9 percent to EUR 874.3 million (previous year EUR 891.0 million). This was due primarily to lower circulation revenues, which fell 2.6 percent to EUR 463.0 million (previous year EUR 475.2 million). The advertising revenues of EUR 389.5 million were at approximately the same level as the previous year (EUR 394.7 million) and reflected the anticipated slowdown in the print advertising market in the third quarter following the Soccer World Cup. Despite the moderate decline in revenues EBITDA gained 12.0 percent over the same period of last year to EUR 230.3 million (previous year EUR 205.6 million).

With a 62.2-percent increase the segment Digital Media accounted for 24.3 percent of consolidated revenues, thereby underscoring the segment’s role as the Group’s growth engine. The increase in revenues from EUR 310.1 million to EUR 504.3 million is attributable primarily to the acquisitions of StepStone and Digital Window (including buy.at). In addition to consolidation effects, among the existing activities mainly the content portals and online marketplaces posted gains. The segment saw advertising revenues increased by 75.6 percent to EUR 388.3 million (previous year EUR 221.1 million) with other revenues rising 30.3 percent to EUR 116.0 million (previous year EUR 89.0 million). Segment EBITDA grew from EUR 23.6 million to EUR 56.1 million, and the EBITDA margin improved from 7.6 percent to 11.1 percent.

The segment Magazines National enjoyed a significantly higher profitability during the first nine months of 2010 compared to the same period of the previous year. EBITDA gained 67.7 percent to EUR 78.6 million (previous year EUR 46.9 million), and the EBITDA margin rose to 22.2 percent (previous year 12.1 percent). Stronger earnings of the TV program guides, car, computer and sports media, the concentration of publication portfolios and the cost containment measures implemented last year all contributed to this improvement in earnings. The 8.3-percent decline in revenues to EUR 354.4 million (previous year 386.5 million) was due primarily to the divestments of the women’s and youth magazines as well as the financial and business publications. Segment revenues adjusted for consolidation effects were only 2.3 percent below the previous year’s figure. Circulation revenues generated by the national magazines amounted to EUR 241.5 million (previous year EUR 270.3 million). When adjusted for consolidation effects they declined by 4.8 percent. Advertising revenues amounted to EUR 96.4 million (previous year EUR 102.4 million) but reached previous year’s level when adjusted for consolidation effects.

The activities in the segment Print International grew significantly with the initial integration of Ringier companies into the joint venture Ringier Axel Springer Media effective July 1, 2010. Through the joint venture Axel Springer is represented for the first time in Serbia and Slovakia. The publication portfolio in the Czech Republic increased significantly with the consolidation of the Ringier activities. This expansion of business activities contributed significantly to the 19.4-percent increase to EUR 268.5 million (previous year EUR 224.9 million) in segment revenues. In Hungary the integration of activities into the joint venture remains subject to the pending decision of the Hungarian cartel authorities. Consolidation-adjusted segment revenues rose 5.0 percent. In the third quarter the effect of the inclusion of the joint venture is reflected even more in the 55.8-percent increase in revenues. During the nine-month period circulation revenues of the international newspapers and magazines rose 16.9 percent to EUR 162.5 million (previous year EUR 139.0 million) while advertising revenues increased by 18.7 percent to EUR 91.7 million (previous year EUR 77.2 million). The consolidation of companies brought into the joint venture Ringier Axel Springer Media by Ringier, growth effects in other foreign markets and the positive effects of cost adjustment measures implemented last year boosted EBITDA considerably from EUR 3.1 million to EUR 34.8 million. The EBITDA margin for the first nine months amounted to 13.0 percent (previous year 1.4 percent).

The segment Services/Holding remained stable with revenues at the same level as the previous year (73.8 million) and EBITDA of EUR -13.9 million (previous year EUR -14.7 million).


Financial situation: higher cash flow from operating activities and proceeds from share placement

Cash flow from operating activities improved to EUR 243.0 million (previous year EUR 174.0 million) as the result of the positive development of business during the first nine months. The cash flow from investing activities was EUR -129.9 million (previous year EUR 152.1 million). Cash outflows were due to, among other things, payments in connection to the founding of Ringier Axel Springer Media AG and the acquisition of a 12.4-percent stake in SeLoger.com SA. Cash inflows were generated by the sale of StepStone Solutions and other stakes. The cash flow from financing activities improved significantly to EUR 183.8 million (previous year EUR -176.4 million), mainly due to proceeds on the sale of treasury shares in the amount of EUR 261.4 million, mainly obtained through the placement of own shares. Overall Axel Springer generated a free cash flow in the amount of EUR 204.9 million (previous year EUR 148.7 million).

At of the end of the third quarter Axel Springer was free of net debt and had net liquidity of EUR 39.0 million (Dec. 31, 2009: net debt of EUR 193.0 million). The equity ratio improved from 40.8 percent at the end of 2009 to 48.8 percent. During the first nine months Axel Springer had an average of 11,387 employees (previous year 10,757). A decisive factor in the increase of 5.9 percent was the consolidation of StepStone and Digital Window and above all the companies initially brought in the joint venture with Ringier in Eastern Europe.

Press contact: Edda Fels Tel: + 49 (0) 30 25 91-7 76 00 edda.fels@axelspringer.de

This press release, Group key figures and the interim report in English can be downloaded from www.axelspringer.com/q-3-2010; the German originals can be downloaded from www.axelspringer.de/q3-2010.

 

GROUP KEY FIGURES

 

 

 

in EUR millions

9M/2010

9M/2009

Change

 

 

 

 

Revenues

2,075.3

1,886.2

10.0%

Newspapers National

874.3

891.0

-1.9%

Digital Media

504.3

310.1

62.6%

Magazines National

354.4

386.5

-8.3%

Print International

268.5

224.9

19.4%

Services/Holding

73.8

73.8

0.0%

 

 

 

 

International revenues

559.2

377.1

48.3%

International revenues as percent of total revenues

26.9%

20.0%

 

Pro forma revenues Digital Media

494.4

410.8

20.4%

Digital Media revenues as percent of total revenues (pro forma)

23.9%

20.7%

 

 

 

 

 

EBITDA1)

385.8

264.5

45.9%

EBITDA margin1)

18.6%

14.0%

 

Consolidated net income

257.6

317.0

-18.7%

Consolidated net income, adjusted2)

241.0

130.1

85.3%

 

 

 

 

Total assets3)

3,623.3

2,934.3

23.5%

Equity3)

1,768.9

1,196.8

47.8%

Equity ratio3)

48.8%

40.8%

 

Free cash flow

204.9

148.7

37.8%

Net debt / liquidity3)

39.0

-193.0

-

 

 

 

 

Earnings per share (in €)4)

8.12

10.47

-22.4%

Earnings per share, adjusted (in ?)2)4)5)

7.43

4.02

84.8%

Closing price (in ?)

96.96

71.70

35.2%

 

 

 

 

Number of employees (average)

11,387

10,757

5.9%

 

1)         Adjusted for non-recurring effects and effects of purchase price allocations.

2)         Adjusted for significant, non-operating items.

3)         As of September 30, 2010 and December 31, 2009 respectively.

4)         Diluted.

5)         The year-ago comparison figure for the adjusted earnings per share was calculated on the basis of the weighted average shares outstanding during the reporting period.

 


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