Axel Springer intensified the expansion of its digital business models during the first three months of the current financial year. With strongly growing contributions to revenues and earnings, they continue to be the Group’s growth engine. Hence, during the first quarter, more than 60 percent of the consolidated revenues and more than 70 percent of the consolidated EBITDA was due to digital activities.
Classified Ad Models again recorded the strongest growth, both organically and as a result of consolidation effects, and also made the highest earnings contribution. Overall, Axel Springer increased the consolidated revenues during the first three months by 12.7 percent. In comparison to the strong figure for the prior year, the consolidated EBITDA increased slightly by 1.2 percent. With an EBITDA margin of 15.3 percent, Axel Springer upheld a high level of financial performance. In view of the expected earnings growth during the second half-year, the Executive Board is confirming its full-year forecast.
Dr. Mathias Döpfner, Chief Executive Officer of Axel Springer SE: “We are making excellent progress with our plans for domestic and international growth and raising our profile as leading digital publisher. Due to the successful internationalization of our digital business, we are now generating nearly half of our revenues outside of Germany.”
During the first quarter, Axel Springer increased total revenues to EUR 780.6 million (PY: EUR 692.3 million). Double-digit growth rates in the Classified Ad Models and Marketing Models segments contributed to this increase. Adjusted for consolidation and currency effects, total revenues increased by 2.5 percent. Adjusted for non-recurring effects, the earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 1.2 percent in comparison to the prior year to EUR 119.8 million (PY: EUR 118.4 million). In this context, a significant earnings increase from Classified Ad Models compensated for lower revenues from Marketing Models and Paid Models.
At EUR 43.0 million, the consolidated net income was below the figure for the prior year (EUR 65.6 million). Earnings per share amounted to EUR 0.32 (PY: EUR 0.58). The higher earnings from the prior year were primarily due to one-off revenues from the sale of shareholdings. During the first quarter of 2015, the financial result was also affected by currency effects and consequently the consolidated net income, adjusted for non-recurring effects and amortization from purchase price allocations, fell to EUR 57.6 million (PY: EUR 61.6 million). The company thus achieved adjusted earnings per share of EUR 0.44 (PY: EUR 0.52).
Due to the expansion of digital activities and acquisitions in the segments of Marketing Models and Classified Ad Models, the average number of employees increased by 11.5 percent to 14,595 (PY: 13,085).
The Executive Board continues to expect revenues and earnings growth for the 2015 full-year. It anticipates a rise in total revenues in the low to mid single-digit percentage range. The Executive Board assumes that the planned increase in advertising revenues will more than compensate for the fall in circulation revenues and other revenues. The Executive Board expects a rise in EBITDA in the high single-digit percentage range. It is anticipated that adjusted earnings per share will be higher than the prior-year figure by an amount in the low double-digit percentage range.
Digital business models with double-digit organic growth and dynamic international expansion
During the first quarter, the Group's growth in Germany and abroad was driven by advancing digitization. The pro-forma revenues from digital activities increased to EUR 469.7 million (PY: EUR 422.5 million). The organic growth of digital media thus amounted to 11.2 percent.
At the same time, the international expansion of the digital business models was forging ahead at high speed. International revenues thus increased by 24.8 percent to EUR 370.3 million (PY: EUR 296.7 million). Axel Springer therefore generated 47.4 percent of its revenues in international markets (PY: 42.9 percent).
Advertising revenues increased during the reporting period by 19.0 percent to EUR 483.3 million (PY: EUR 406.2 million). This growth was substantially based on digital activities which generated 80.7 percent of the Group's advertising revenues. Due to structural declines within the print business, circulation revenues fell as expected by 4.2 percent to EUR 174.4 million (PY: EUR 182.1 million). Other revenues increased by 18.1 percent to EUR 122.9 million (PY: EUR 104.0 million). This reflected above all the growth in the Paid Models and Marketing Models segments.
Classified Ad Models remain the growth engine of the Group
The Classified Ad Models segment showed again a very pleasant development. The antitrust approval of the merger of the real estate portals Immonet and Immowelt in mid-April 2015 was a major strategic step. The closing of the transaction is not yet included in the figures for the first three months, this is expected to happen in the second quarter of 2015. Revenues for the segment were up by 58.5 percent to EUR 176.2 million (PY: EUR 111.2 million). Both the strong organic growth, in particular of the job portals, and the consolidation effects from including @Leisure, LaCentrale, Jobsite, and Yad2 for the first time contributed substantially to this. Adjusted for these effects, revenues rose by 14.7 percent. Advertising revenues for the segment were up by 60.9 percent, and up by 16.8 percent when adjusted for consolidation effects.
EBITDA for the segment increased considerably by 46.6 percent to EUR 70.7 million (PY: EUR 48.2 million). With an EBITDA margin of 40.1 percent (PY: 43.4 percent) Classified Ad Models remained the most profitable segment. The slight decrease in the margin reflects, amongst other things, consolidation effects of acquisitions in the prior year. The Jobs sector achieved an EBITDA margin of 42.2 percent (PY: 45.1 percent), the Real Estate sector achieved 45.0 percent (PY: 46.7 percent), and the General/Other sector achieved 33.6 percent (PY: 15.7 percent).
Revenues in the Paid Models segment amounted to EUR 348.7 million in the first quarter and were therefore more or less stable compared with the prior year (EUR 353.8 million). Adjusted for consolidation effects, revenues fell by 4.9 percent. Advertising revenues for the segment were 3.0 percent down on the prior year. Adjusted for consolidation effects, these were down by 6.3 percent. Due to the market-related fall in print revenues, circulation revenues for Paid Models also decreased by 4.3 percent. Other revenues increased significantly by 25.1 percent, in particular due to the inclusion of N24 for the first time as of March 2014. Adjusted for consolidation effects, these were 2.0 percent below the prior year.
In Germany, BILD and DIE WELT together had more than 324,000 paying digital subscribers – BILD had more than 260,000, and DIE WELT just under 64,000 digital subscribers (IVW Paid Content 3/2015).
EBITDA for the Paid Models was down by 29.7 percent to EUR 40.3 million (PY: EUR 57.3 million). In addition to the structural decreases in revenues, this was particularly due to the higher restructuring expenses and investments in the expansion of digital operations. The EBITDA margin for the segment was therefore 11.6 percent compared to 16.2 percent in the prior year.
Revenues for the Marketing Models segment increased by 16.0 percent to EUR 219.0 million (PY: EUR 188.9 million). Growth in the area of Performance Marketing in particular had a positive effect on the advertising revenues for the segment. These were up by 10.8 percent in the reporting period. The 40.2 percent growth in the other revenues was, however, mainly achieved by Reach Based Marketing.
Whereas EBITDA rose slightly in Performance Marketing, higher expenses to strengthen the competitiveness of Reach Based Marketing led to corresponding decreases. Overall, EBITDA for the segment was down 15.1 percent to EUR 22.4 million (PY: EUR 26.4 million). The EBITDA margin was 10.2 percent (PY: 14.0 percent).
The Services/Holding segment saw a market-related decline in revenues of 4.6 percent, down to EUR 36.7 million (PY: EUR 38.4 million). EBITDA for the segment was unchanged at EUR -13.6 million.
Stable financial basis for further growth
In the first three months of the year, free cash flow was down by 10.3 percent to EUR 70.9 million (PY: EUR 79.0 million). Net debt was down slightly from EUR 667.8 million at year end 2014 to EUR 662.2 million as of 31 March 2015. At the end of the quarter, Axel Springer had unutilized short-term and long-term credit facilities amounting to EUR 594.0 million (31 December 2014: EUR 511.0 million). At the end of March, Axel Springer's equity ratio was 43.6 percent (PY: 42.4 percent).