MIL OSI – Source: Axel Springer in English – Press Release/Statement
Headline: Axel Springer achieves strong growth in revenues and earnings in 2017
Economic and strategic goals reached / Revenues growing organically by 6.3 percent / Adjusted EBITDA adds 8.5 percent / Growth in all operating segments / Digital Media with organic profit increase by 12.5 percent / Dividend recommendation raised to EUR 2.00 per share / For 2018, organic increase in adjusted EBITDA as well as adjusted earnings per share in the mid to high single-digit percentage range expectedAxel Springer consistently implemented its strategy and reached all of the Group targets for the 2017 financial year. The focus on organic growth, the use of synergies in the existing portfolio and the targeted acquisitions have shown results: All operating segments posted sales and profit increases over the reporting year. The digital business models in particular contributed to this development. Over the course of the last financial year, they accounted for 71.5 percent of revenues, 87.1 percent of advertising revenues, and 80.0 percent of the adjusted consolidated EBITDA. Adjusted for consolidation and currency effects, the digital activities achieved strong growth in revenues of 12.5 percent.
Overall, Axel Springer increased the company revenues by 8.3 percent. Adjusted for consolidation and currency effects, revenues increased by 6.3 percent. Earnings prior to interest, taxes, depreciation, and amortization (EBITDA), adjusted for purchase price allocations and non-recurring effects, rose by 8.5 percent. The adjusted earnings per share increased by 8.1 percent. Axel Springer has thus achieved its full-year forecast for the 2017 financial year. For the financial year 2017, the Executive Board and the Supervisory Board will propose to the Annual General Meeting to raise the dividend to EUR 2.00 per share (PY: EUR 1.90 per share).
Dr. Mathias Döpfner, Chief Executive Officer of Axel Springer SE: “With its significant organic growth in revenues and EBITDA, Axel Springer is documenting a new phase of development – as a digital growth enterprise. Be it current world news, the next hunt for an apartment, or a job search – our offers provide reliable information, entertainment and guidance in the most diverse of life situations. We will continue to build on this model for success over the current year.”
In the previous financial year, Axel Springer set further strengthening of profitability as a priority. By leveraging potentials within the existing portfolio, the Classifieds Media segment reported particularly strong organic growth. In addition, the segment expanded its market-leading position further through targeted acquisitions. The News Media segment reported a modest increase in revenues despite the persistently challenging environment over the previous financial year. The attractiveness of the brands and the growing contributions from the online business were decisive factors in this development. In the Marketing Media segment, a number of portfolio optimizations in 2017 set the course for continued positive development of the segment.
The consolidated results in detail: Strong Revenues and Profit Growth
Axel Springer substantially increased consolidated revenues over the last financial year by 8.3 percent to EUR 3,562.7 million (PY: EUR 3,290.2 million). Adjusted for consolidation and currency effects, revenues increased by 6.3 percent. The adjusted EBITDA recorded a plus of 8.5 percent, reaching EUR 645.8 million (PY: EUR 595.5 million). The adjusted EBITDA margin at 18.1 percent was at the same high level as in the previous year.
During the reporting period, Axel Springer generated a consolidated profit of EUR 378.0 million. The previous year value (EUR 450.0 million) was characterized by positive one-off effects in connection with the integration of the activities in Switzerland into a joint venture with Ringier, the sale of CarWale, and of the building in Hamburg. The earnings per share in 2017 amounted to EUR 3.19 (PY: EUR 3.94). The consolidated net income adjusted for non-recurring effects and depreciations due to purchase price allocations was 9.2 percent higher compared to the previous year and reached EUR 327.5 million (PY: EUR 299.9 million). The adjusted earnings per share increased by 8.1 percent, to EUR 2.60 (PY: EUR 2.41).
The average number of employees increased from 15,323 to 15,836. This is largely due to new hiring in the Classifieds Media and Marketing Media segments.
Forecast for 2018: Increase in Revenues and adjusted EBITDA
For the financial year 2018, the Group anticipates an increase in revenues in the low to mid single-digit percentage range. Organically, which means adjusted for consolidation and currency effects as well as the effects of the new accounting standard IFRS 16, revenues will also grow in the low to mid single-digit percentage range. The adjusted EBITDA will prospectively rise in the low double-digit percentage range. For the adjusted earnings per share, Axel Springer expects an increase in the low to mid single-digit percentage range. Organically, adjusted EBITDA as well as adjusted earnings per share will prospectively increase in the mid to high single-digit percentage range expected.
Revenues in the Classifieds Media segment will prospectively reach a rise in the double-digit percentage range. The same applies for the adjusted EBITDA, where the Group also expects growth in the double-digit percentage range. The organic increase is anticipated to lie in the high single-digit to low double-digit percentage range, despite increased investments in IT, marketing and sales.
Revenues in the News Media segment will prospectively display a decrease in the low to mid single-digit percentage range. Deconsolidation effects from the sale of the print portfolio in Slovakia will come into play here, starting at mid-year. The Group expects the adjusted EBITDA to increase in the mid single-digit percentage range. Organically, there will prospectively be a decrease in the low to mid single-digit percentage range.
The Group anticipates revenues in the Marketing Media segment to decline in the high single-digit percent range, considerably impacted by the expected completion of the sale of aufeminin in France. The adjusted EBITDA is expected to grow in the high single-digit percent range, organically in the low double-digit percent range.
Regarding the Services/Holding segment, Axel Springer anticipates revenues to decrease in the mid single-digit percentage range due to market factors. The adjusted EBITDA will prospectively improve in the low to mid single-digit percentage range. Organically, a decline in the mid single-digit percentage range is expected.
Digital Media and International Business Drive Organic Profit Growth
The digital business models contributed decisively to the Group’s growth in the past financial year. Adjusted for consolidation and currency effects, they reported a 12.5 percent growth in revenues.
The international business as well continued to develop very dynamically in the reporting period. International revenues increased by 12.5 percent to EUR 1,759.8 million (PY: EUR 1,564.3 million). Their share in the consolidated revenues thus increased to 49.4 percent over 47.5 percent in the previous year.
Advertising revenues increased firmly by 13.4 percent to EUR 2,521.3 million (PY: EUR 2,223.1 million). This increase is due to the positive development across all operating segments. Here as well, the digital activities continued to gain importance: Their share over the consolidated advertising revenues rose to 87.1 percent (PY: 84.8 percent). Due to market factors, the circulation revenues recorded a slight decrease by 2.1 percent to EUR 633.0 million (PY: EUR 646.9 million). The rising digital circulation revenues could not yet fully compensate for the declining print publication revenues. Due to deconsolidation effects, other revenues declined by 2.8 percent to EUR 408.3 million (PY: EUR 420.2 million). Adjusted for consolidation and currency effects, they nearly remained constant at the previous year level (-0.8 percent).
Revenues and Earnings Growth in all Operating Segments
The Classifieds Media segment remained the Group’s growth engine on the revenues and earnings side in the past financial year. Revenues increased by 14.6 percent to EUR 1,007.7 million (PY: EUR 879.5 million). A very dynamic operative development was decisively responsible for this, especially in the job and real estate portals, where this was reflected in organic growth of 12.7 percent.
The adjusted EBITDA increased strongly from EUR 354.6 million to EUR 413.2 million and thus reached growth of 16.5 percent compared to the previous year. Organically, meaning adjusted for consolidation and currency effects, the increase amounted to 14.7 percent. The margin as well developed positively and reached an extremely profitable level of 41.0 percent (PY: 40.3 percent).
The News Media segment increased its revenues compared to the previous year by a positive 1.9 percent to EUR 1,509.8 million (PY: EUR 1,481.6 million). This development was particularly characterized by the impressive growth dynamics of BUSINESS INSIDER. The national brands BILD and WELT also contributed to the success of the segment with a strong year in advertising revenues. In January 2018, the integration of the television channel, formerly N24, under the umbrella brand of WELT was completed. The multimedia offer of WELT is thus exemplary today of the Group-wide approach of Axel Springer to presenting and marketing the journalistic offerings across various channels.
Despite high restructuring expenses in the second half of the year and the generally declining print market, the adjusted EBITDA improved by 2.0 percent from EUR 214.4 million to EUR 218.8 million. The organic adjusted EBITDA was 3.2 percent below the value of the previous year. The margin at 14.5 percent remained on the level of the previous year (14.5 percent).
The Marketing Media segment earned revenues of EUR 984.5 million, which was higher by 15.0 percent (PY: EUR 856.2 million). This was attributable in the fourth quarter also to the integration of AWIN and affilinet in Performance Marketing. Adjusted for consolidation and currency effects, the growth amounted to 12.4 percent in the financial year.
The adjusted EBITDA recorded a substantial plus of 16.3 percent to EUR 95.6 million (PY: EUR 82.2 million). The segment generated an organic adjusted EBITDA improvement of 8.4 percent. The margin at 9.7 percent remained on the level of the previous year (9.6 percent). Aside from the economic successes, the Marketing Media segment was over the financial year 2017 also further optimized by targeted acquisitions, sales and restructuring, thus organizing it viably for the future. A visible result of these measures was most recently the contractually initiated sale of the investment in aufeminin S.A.
The Services/Holding segment recorded revenue decline of 16.8 percent to EUR 60.7 million in the financial year (PY: EUR 72.9 million). The adjusted EBITDA reduced from EUR -55.7 million in the previous year to EUR -81.7 million.
Free cash flow significantly higher, financial basis strengthened further
In the reporting period, Axel Springer increased its free cash flow, excluding the effects of real estate transactions, by 48.5 percent to EUR 341.1 million (PY: EUR 229.7 million). The net debt as at December 31, 2017 amounted to EUR 1,020.2 million and was thereby slightly below the value of EUR 1,035.2 million as at the end of the year 2016. At the end of the financial year 2017, the Group had non-utilized short-term and long-term credit facilities totaling EUR 855.0 million (December 31, 2016: EUR 840.0 million). Axel Springer thereby succeeded in strengthening its financial basis further. The company’s equity ratio improved further and as at the reporting date, it was 43.5 percent (PY: 40.9 percent).
This press release, the Group Key Figures and the annual report are available in German and English at http://www.axelspringer.com/fy17.