Berlin-based Axel Springer has strengthened its position as leading digital publisher in the 2015 financial year reporting an 8.5 per cent increase in revenues to EUR 3,294.9 million and a 10.2 per cent improvement to EBITDA.

EBITA increased from EUR 507.1 million to EUR 559.0 million which slightly exceeded expectations for the 2015 financial year.

Axel Springer generated nearly half of its total revenues in international markets, as a result boasting an increase of 20.2 per cent to EUR 1,573.5 million in these markets.

Chief Executive Officer Dr Mathias Döpfner says the dynamic development of the company’s digital business models is clearly reflected in the group’s growth in 2015.

“Revenues from digital activities increased in the reporting period to EUR 2,004.6 million and therefore achieved organic growth of 11.7 percent," Döpfner says. "In 2015, they exceeded the EUR 2 billion mark for the first time.”

He says the increase was mainly driven by growth in the company’s Classified Ad Models and Marketing Models, which showed “pleasing organic growth”. Advertising revenues also increased significantly by 16.1 per cent to EUR 2,107.6 million.

“The Classified Ad Models segment again achieved the highest rate of growth in the 2015 financial year in terms of revenues and EBITDA,” he says.

“Revenues from the segment increased by 47.1 per cent to EUR 753.1 million. In addition to strong organic growth, consolidation effects from the first-time incorporation of @Leisure, LaCentrale, Jobsite, Immowelt and Yad2 were also noticeable here.

“Adjusted for these effects, revenues in the segment grew by 14.5 per cent.”

DIGITAL COMPENSATES FOR DECLINING PRINT 
The company notes increasing revenues from digital sales were able to partially compensate for the structural circulation declines in the print business. Consequently, circulation revenues, at EUR 721.7 million, were only slightly lower than in the prior year.

Döpfner says Axel Springer achieved its targets and in the 2015 financial year and accelerated the expansion of its digital business models by investing specifically in digital journalistic offerings in the English speaking world.

Digital activities contributed 62 per cent of the company’s total revenues and 70 per cent of the Group’s EBITDA in the reporting period. Its share of total advertising revenues was 80 percent.

The company’s EBITDA margin, already at a high level, improved from 16.7 percent to 17.0 per cent and adjusted earnings per share increased by 10.3 percent. This slightly exceeded expectations for the 2015 financial year.

“The Executive and Supervisory Boards will propose a constant dividend payout of EUR 1.80 per share for the 2015 financial year to the Annual General Meeting,” Döpfner reveals.

“Due to the increased number of shares, the total dividend payout increases from EUR 178.1 million to EUR 194.2 million.”

ASSET HUNGRY
Döpfner says Axel Springer is currently one of the world’s largest digital publishers in terms of reach.

“We see considerable potential for the long-term increase in the value of our digital activities and will focus in 2016 on successfully developing the investments we have made in recent months,” he says.

In the current financial year, Döpfner says Axel Springer will continue to invest in the accelerated expansion of its digital business models.

“The focus will be on the business and financial news portal Business Insider, the innovative content platform UPDAY, as well as the mobile US shopping platform Retale.

“In addition, the company will promote growth in its Classified Ad Models and in digital subscriptions for its Paid Models.

As a result of the continued increase in digital business as well as acquisitions, the average number of employees increased by 7.9 percent to 15,023.

2016 FINANCIAL OUTLOOK
For the 2016 financial year, the Axel Springer Executive Board expects an increase in total revenues in the low single-digit percentage range.

Adjusted for consolidation effects, above all the deconsolidation of activities in Switzerland, growth would be higher and be in the mid single-digit percentage range.

The Executive Board assumes that the planned increase in advertising revenues will more than compensate for the decrease in circulation revenues and other revenues.

With regard to EBITDA, the Board expects an increase in the low to mid single-digit percentage range. The EBITDA in the Classified Ad Models segment is expected to rise, while EBITDA in the Marketing Models segment is expected to be around the level of the prior year.

For the Paid Models and Services/Holding segments, an EBITDA below the prior year’s levels is expected.

HISTORY
Axel Springer was founded in 1946 by Axel Springer and his father Hinrich. It initially published a single monthly magazine about books. Other magazines followed, and then the daily tabloid newspaper Bild, which was modelled on the British tabloid The Daily Mirror. The company grew through acquisitions, and is now controlled by Springer’s widow Friede, who owns a majority of the shares.

Based in Berlin, it is a giant in the German media business, with leading newspaper and magazine titles that include Bild and Die Welt, and annual revenues of about 3 billion Euros, or $3.2 billion.

Fortune last year reported the company’s aggressive moves into US media are part of an ambitious growth strategy designed by Mathias Dopfner, who has been Springer’s CEO since 2002.

“There are two main prongs to the strategy, which is being powered by the cash flow from the company’s traditional media assets: 1.) Expand further into digital content, and 2.) Expand further into English-speaking markets like the U.S. and Britain,” Fortune reported in October 2015.

BUSINESS INSIDER
The company last year bought Busininess Insider—a company it already owned a small stake in—for $343 million,
In a tangible sign of his determination to buy the news startup, the purchase price for Business Insider valued the entire company at close to $500 million, or more than twice what it was valued at when Springer first invested in the company nine months earlier.

“This really is a pivotal point in the changing of the media landscape,” Fortune reported Dopfner to have said on the conference call announcing the Business Insider deal, referencing the billion-dollar valuations for companies like Vice, Vox and BuzzFeed.

“New digital media companies are being built and we definitely want to be a player. With Business Insider we have laid the foundation to achieve that.”

Fortune also reported that Springer has been building up what amounts to a hedge fund portfolio made up of stakes in media startups, primarily based in New York.

It now owns small amounts of half a dozen companies, including: Ozy Media (founded by former MSNBC news anchor Carlos Watson), Mic (co-founded by Chris Altchek and Jake Horowitz) and NowThis News (one of a stable of companies funded by Lerer Ventures). Most are aimed at a millennial news audience.

Springer is also a 50% shareholder in Politico Europe, the European arm of the US political-news startup founded by former Washington Post staffers Jim VandeHei and John Harris. That partnership fulfils both of Springer’s requirements — it is an English-speaking company, and it is almost 100% digital (although it does publish print versions of its topic-focused newsletters for certain markets).

AHEAD OF THE GAME
Although part of Springer’s strategy is to become more digital, it should be noted that the company is already much farther along that road than many of its competitors, either in Europe or the U.S.

In 2012, Springer created a digital classified business in partnership with the private equity fund General Atlantic, and expanded it by acquiring a job-listing site called TotalJobs from Reed Elsevier. More than 70% of the company’s cash flow now comes from digital businesses.

“Springer has also been trying to build its own digital businesses in-house as well,” The Fortune 2015 report adds.

“It recently partnered with Samsung to launch a curated-news product called Upday that aggregates news from a variety of sources for users of Samsung phones.

“At the same time, Dopfner has been a vocal critic of Google’s dominance in search and search-related advertising, writing an ‘open letter’ to chairman Eric Schmidt about his concerns that the company has too much power online,” the 2015 Fortune report points out.