MIL OSI – Source: Axel Springer in English – Press Release/Statement
Headline: Axel Springer continues growth in first half-year
During the first six months of the current financial year, Axel Springer SE further expanded its digital business models. In the first half year, digital activities contributed a total of 67 percent to total revenues, 72 percent to consolidated EBITDA and 85 percent to advertising revenues. Adjusted for consolidation and currency effects, the organic growth in revenues from digital media amounted to 11.0 percent. Despite significant deconsolidation effects resulting, inter alia, from integrating the Swiss activities into Ringier Axel Springer Schweiz AG, Axel Springer increased total revenues slightly by 0.5 percent to EUR 1,585.3 million (PY: EUR 1,577.3 million.). Adjusted for consolidation and currency effects, revenues increased by 5.3 percent.
During the first half-year, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for non-recurring effects, increased by 2.3 percent to EUR 272.9 million (PY: EUR 266.7 million.). A sharp increase in Classified Ad Models was once again the major factor driving this growth. Among other factors, the planned higher investments in digital growth projects impacted upon the other segments. The EBITDA margin improved slightly during the reporting period from 16.9 percent to 17.2 percent. For the whole of 2016, the Executive Board – despite the numerous macroeconomic and political risks – adheres to the forecasts for EBITDA and earnings per share. It slightly adjusts the outlook for group revenue, however, and now expects a stable development instead of the slight growth that was originally forecast. Organically, group revenue grows in the mid-single-digit percent range.
Dr Mathias Döpfner, Chief Executive Officer of Axel Springer SE: “We have further improved our market position by means of targeted acquisitions, such as, most recently, eMarketer in the strategic growth market of the USA as well as in the area of Classified Ad Models. We are confident that our investments in digital growth will increasingly pay off.”
Targeted investments in digital growth
During the first half-year, the Group invested, as announced, in the further development of the digital growth projects BUSINESS INSIDER and Upday as well as in the expansion of the US activities of the Bonial Group. At the same time, Axel Springer expanded the digital business with targeted acquisitions. In the strategic growth market of the USA, the Group acquired about 93 percent of the shares in eMarketer Inc., a leading provider of high-quality analyses, reports, and digital market data, with its headquarters in New York. Axel Springer has thus expanded its portfolio of innovative Paid Models and strengthened its position with respect to business coverage and information. The transaction was completed in July 2016.
In May – after having acquired the majority shareholding in Traum-Ferienwohnungen GmbH in April – the Axel Springer-owned @Leisure Group also announced a voluntary public takeover bid to acquire all of the shares in Land & Leisure A/S. Land & Leisure brokers vacation properties and vacation park accommodation in Denmark, Sweden, Norway, and Germany under the brand names DanCenter and Danland. On July 25, 2016, @Leisure acquired 76.0 percent of the shares for approximately EUR 47.0 million. The company has thus strengthened its position in Scandinavia.
During the reporting period, the average number of employees increased, due to the expansion of digital activities and acquisitions, by 1.4 percent to 14,986 (PY: 14,781).
A significant increase in consolidated net income
Axel Springer increased the consolidated net income adjusted for non-recurring effects as well as depreciation, amortization, and impairments from purchase price allocations by 7.1 percent to EUR 146.2 million (PY: EUR 136.5 million.). The adjusted earnings per share increased by 9.9 percent from EUR 1.09 during the prior year to EUR 1.20. The unadjusted consolidated net income increased considerably during the reporting period from EUR 111.0 million to EUR 273.2 million. The primary contributors to this increase were the one-time effects from the sale of business activities such as CarWale in India and revenues in connection with the founding of the Swiss joint venture with Ringier. The non-adjusted earnings per share increased from EUR 0.81 during the prior year to EUR 2.41.
Early loan repayment by Funke Mediengruppe / Significant increase in free cash flow
Axel Springer increased the free cash flow in the first six months of the year from EUR 86.9 million to EUR 116.3 million. The early repayment, made at the end of April, of the vendor loan in the amount of approximately EUR 260.3 million including interest by Funke Mediengruppe contributed to a reduction in the net liabilities to EUR 844.0 million as of June 30, 2016 (December 31, 2015: EUR 1,066.6 million). As of the end of the first half-year, the Group held, in addition to the Schuldschein (promissory note) of EUR 580.5 million, long-term credit facilities in the amount of EUR 1,500.0 million, of which EUR 535.0 million had been utilized (December 31, 2015: EUR 618.0 million). As of the end of June, the Group’s equity ratio was 40.9 percent (PY: 38.6 percent).
Summary of developments in operational segments
The Classified Ad Models further expanded their position as the Group’s most profitable segment during the first six months. Their revenues increased by 19.5 percent to EUR 424.7 million (PY: EUR 355.3 million.). Strong organic growth of 12.0 percent and the consolidation effects, from the integration of Immowelt in particular, contributed to this positive development. The EBITDA of the segment increased considerably by 17.0 percent to EUR 171.4 million (PY: EUR 146.5 million). The EBITDA margin from the Classified Ad Models has, with 40.4 percent (PY: 41.2 percent), once again reached a high level.
In the Paid Models segment, revenues decreased during the first half-year by 5.6 percent to EUR 709.0 million (PY: EUR 751.3 million.). The deconsolidation of the Swiss activities was a critical factor in this respect. Adjusted for consolidation and currency effects, revenues were, at 0.8 percent, slightly higher in comparison to the prior year. With almost 398,000 paying digital subscribers (IVW Paid Content 6/16), the journalistic Paid Models of BILD and WELT continued to develop positively. In comparison to the prior year, they generated growth of 20.4 percent and 17.9 percent respectively.
During the reporting period, the EBITDA from the Paid Models was EUR 83.0 million and was therefore 18.1 percent lower than the prior year (EUR 101.3 million). This was especially due to the planned growth investments in BUSINESS INSIDER and Upday. The national models recorded an EBITDA increase of 4.3 percent. The EBITDA margin for the segment was 11.7 percent, a decrease after 13.5 percent in the prior year.
During the first six months, the revenues from the Marketing Models segment decreased by 3.3 percent to EUR 414.1 million (PY: EUR 428.1 million.). This was solely due to consolidation effects, in particular from the sale of Talpa Germany, Smart AdServer and Smarthouse Media. Adjusted for consolidation and currency effects, the segment generated an 8.0 percent growth in revenues. The EBITDA from the Marketing Models decreased by 3.1 percent during the reporting period to EUR 46.5 million (PY: EUR 48.0 million.). Whereas the EBITDA improved slightly in the area of Performance Marketing, the planned costs of expanding the Bonial Group in the USA resulted in an EBITDA decrease in the area of Reach Based Marketing. During the first half-year, the EBITDA margin for the segment was stable at 11.2 percent (PY: 11.2 percent).