During the first three months of the 2016 financial year, Axel Springer profited once again from the growth momentum of its digital business models with revenues up by 0.4 per cent to EUR 783.4 million.
Driven by a significant improvement in the group's Classified Ad Models, EBITDA increased by 5.2 per cent with unique users worldwide reaching 200 million.
The group also experienced growth in the area of its journalistic Paid Models. With a total of 394,000 paying digital subscribers the services of BILD and DIE WELT recorded growth yet again.
Axel Springer's digital businesses increased their contribution to total revenues to 67 per cent, generating 72 per cent of the group’s EBITDA.
The increasing internationalization of the digital activities also resulted in the share of international revenues increasing slightly to approximately 48 per cent of total revenues.
During the first quarter, these were noticeably affected by deconsolidation effects including the transfer of Swiss activities to Ringier Axel Springer Schweiz AG, whose revenues are no longer consolidated with Axel Springer, as well as the sale of Talpa Germany and Smart AdServer.
Adjusted for consolidation and currency effects, Axel Springer recorded an increase in revenues of 4.6 per cent.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) improved by 5.2 per cent to EUR 125.9 million compared to the prior year quarter (PY: EUR 119.8 million).
EBITDA margin improved from 15.3 per cent to 16.1 percent.
The company says based on development during the first quarter, its forecast published at the beginning of March 2016 in its Annual Report remains unchanged.
"The strong position of Axel Springer’s digital activities is supported by aggregated figures for the group’s digital reach," the company reports.
During the first quarter, taking into account all digital platforms, the company attained 200 million unique users worldwide as a monthly average and an average monthly number of visits totaling 1.4 billion. In addition, 1.1 billion videos were viewed.
Axel Springer SE Chief Executive Officer Dr Mathias Döpfner says during the first quarter, the group made good progress with the implementation of our digital growth projects.
"With our digital offerings we are reaching 200 million users worldwide. Three quarters of our users can be attributed to our journalistic brands. We want to continue expanding this strong reach,” he says.
Digital growth projects pushed forward
During the first quarter further development of digital growth projects included Business Insider and Upday, as well as the US Bonial Group business.
The company says following a successful test phase, the full version of the Upday platform for aggregated news content was launched end of February in Germany, France, Great Britain and Poland.
At the end of the quarter, @Leisure Group, an operator of online agency portals for vacation properties in Europe which is majority-owned by Axel Springer, acquired the controlling interest in Traum-Ferienwohnungen GmbH.
This business, which has its registered office in Bremen, now operates the booking-platforms of traum-ferienwohnungen.de, allowing @Leisure Group to house all its agency services for arranging vacation houses and apartments, under one roof.
The expansion of digital business, as well as the acquisitions, has lead to the average number of employees increasing, during the reporting period, by 2.0 percent to 14,886.
The net income adjusted for non-recurring effects as well as amortization and impairments from purchase price allocations improved by 13.3 per cent to EUR 65.3 million (PY: EUR 57.6 million).
Axel Springer therefore achieved adjusted earnings per share of EUR 0.53 compared to EUR 0.44 in the prior year.
Net income increased significantly during the reporting period, from EUR 43.0 million to EUR 209.4 million due to the transfer of Swiss business operations into the newly founded joint venture with Ringier in Switzerland which was completed in early 2016.
The sale of CarWale in India also contributed, increasing earnings per share to EUR 1.88 (PY: EUR 0.32).
During the first three months of the year, free cash flow decreased by 6.4 per cent to EUR 66.4 million (PY: EUR 70.9 million).
Net debt also decreased from EUR 1,066.6 million at the end of 2015 to EUR 902.4 million, as of March 31, 2016.
At quarter end, EUR 558.0 million (December 31, 2015: EUR 618.0 million) of the existing long-term credit facility, amounting to EUR 1,500.0 million, were taken as drawdowns. At the end of March, Axel Springer’s equity ratio was 41.4 per cent (PY: 38.6 percent).
Breakdown of operating segments
During the first quarter, the Classified Ad Models segment increased revenues by 20.9 per cent to EUR 212.9 million (PY: EUR 176.2 million).
In addition to the strong organic growth of 10.3 per cent, consolidation effects, arising in particular from the integration of Immowelt, also contributed to this increase.
EBITDA of the segment once again increased considerably by 18.4 per cent to EUR 83.2 million (PY: EUR 70.2 million).
After adjustment Classified Ad Models recorded an EBITDA increase of 11.7 per cent. With an EBITDA margin of 39.1 per cent (PY: 39.9 percent), the segment remained highly profitable.
Revenues from the Paid Models segment were EUR 340.8 million during the first three months and were therefore 5.5 per cent lower than the prior year (EUR 360.7 million).
After adjustment for consolidation effects, which can be mainly attributed to the deconsolidation of Swiss business operations, the revenues decreased by only 1.1 per cent.
EBITDA for the Paid Models declined by 14.7 per cent in the reporting period, to EUR 37.1 million (PY: EUR 43.5 million).
The major factor contributing to this was the planned growth investment in Business Insider and Upday and, without this factor, earnings would have increased slightly.
Earnings from national offers improved, particularly in the case of the BILD and WELT Group. The segment’s EBITDA margin was 10.9 per cent, a decrease from 12.1 per cent in the prior year.
At EUR 210.5 million, first-quarter revenues from the Marketing Models segment were 3.9 per cent below the prior-year (EUR 219.0 million).
This downward development is attributable solely to the sale of Talpa Germany and Smart AdServer. Adjusted, the segment generated a 4.4 per cent growth in revenues.
EBITDA for the Marketing Models decreased by 11.7 per cent during the reporting period to EUR 19.5 million (PY: EUR 22.1 million).
Critical to this were, the planned increase in expenditure for the development of the Bonial Group’s business in the USA. The EBITDA margin was therefore 9.3 per cent (PY: 10.1 percent).