Business News
Axel Springer achieves highest profit in company history
Wednesday 11. March 2009 - Revenues grow by 5.8 percent / EBITDA exceeds forecast and previous years figure / Highest net income since the company was founded / Record dividend of EUR 4.40 proposed / Total number of employees grows by 3.1 percent
Despite the sharp downturn in the economy, Axel Springer achieved a record result for the fifth consecutive year in 2008. At the annual press conference in Berlin Chief Executive Officer Dr. Mathias Döpfner presented the development of business and underscored the sustainable success of the Groups strategy of market leadership in its core business, digitization and internationalization. He announced to propose a record dividend of EUR 4.40 for the shareholders of Axel Springer. The Company demonstrated its operating strength in an extremely difficult market environment characterized by the economic downturn and structural challenges. The Group saw revenues grow in its international and digital businesses and sustained its earnings power through disciplined cost management.
As previously announced on February 25, 2009, Axel Springer achieved a 5.8 percent increase in consolidated revenues for the 2008 financial year to EUR 2,728.5 million (previous year: EUR 2,577.9 million). Especially companies which were acquired in 2007, such as activities in Switzerland as well as zanox.de and auFeminin.com, contributed to this development. Revenues rose 1.2 percent when adjusted for consolidation effects. Advertising revenues grew by 4.6 percent, and the Groups international and digital businesses more than compensated for the significant setbacks suffered by the domestic newspapers and magazines. Circulation revenues grew by 2.1 percent Group-wide as the result of copy price increases. Pro forma revenues from digital activities rose 24.6 percent, thereby accounting for 14,0 percent of consolidated revenues. Axel Springer also enjoyed a significant increase in foreign revenues, which jumped 11.1 percent to EUR 596.8 million (previous year: EUR 537.2 million). The share of international revenues thereby increased from 20.8 percent in 2007 to 21.9 percent for the year under review. The number of employees at Axel Springer climbed 3.1 percent to 10,666 (previous year: 10,348) on annual average.
Despite the slow economy Axel Springer achieved record results for the 2008 financial year with respect to EBITDA, EBITA, and net income. TheGroup posted an increase in earnings before interest, taxes, depreciation and amortization (EBITDA) adjusted for non-recurring effects and effects from purchase price allocations of EUR 470.0 million to EUR 486.2 million. Thus, the EBITDA margin amounted to 17.8 percent. Earnings from newly acquired businesses, lower start-up costs and strict cost management throughout the Group contributed significantly to this record result. The EBITDA adjusted for the dividend from ProSiebenSat.1 Media AG and income from the Kirch insolvency increased to EUR 480.0 million and significantly exceeded the forecast of at least EUR 433.9 million.
The EBITA for 2008 of EUR 422.1 million was also slightly higher than the previous years figure of EUR 421.7 million. After finishing the 2007 financial year with a net loss of EUR 288.4 million as a result of the write-down for the PIN Group, Axel Springer achieved the highest net income in company history of EUR 571.1 million in 2008. Besides the excellent operating result net income was boosted by the proceeds from the sale of the stake in ProSiebenSat.1 Media AG. When adjusted for major non-operative items, net income also rose from EUR 234.6 million to EUR 254.5 million.
Earnings per share were reversed from EUR -9.70 in 2007 to EUR 18.54 in 2008. At the shareholders meeting the Management and Supervisory Boards will recommend the payout of a record dividend of EUR 4.40.
Dr. Mathias Döpfner, CEO of Axel Springer AG, said: “Despite the extremely gloomy economic environment, Axel Springer not only met expectations but significantly surpassed them by achieving the best result in the history of the company. With respect to the media sector and beyond we find ourselves in an exceptional position. We have demonstrated in our core business that we can generate robust earnings even in times of crisis. Our international and digital activities are fueling our dynamic growth. And our digitization successes show that we stand a very good chance of becoming one of the winners in the structural transformation of the media sector.”
In reference to the current financial year, Döpfner added: “For 2009 we must be prepared for an extremely difficult advertising market and the impact of recessive developments. It would be irresponsible to make a definitive forecast in this extremely volatile environment. We will, of course, be unable to achieve the record results of the previous year. Our task will be to expand our advantage over our competitors and invest in the strength of our brands and in digitization. We want to offer newspapers, magazines and websites which inspire our readers with excellent journalism also after the crisis has passed. We are therefore convinced that our market shares will continue to grow and that we will emerge from the crisis strategically stronger than before.”
Growth in all revenue categories despite the slow economy
For the 2008 financial year Axel Springer posted an increase in circulation revenues of 2.1 percent to EUR 1,215.8 million (previous year: EUR 1,190.6 million). The Group was able to more than compensate for the overall decline in circulation by raising copy prices. Despite a general decline in advertising business, advertising revenues grew by 4.6 percent to EUR 1,248.1 million (previous year: EUR 1,193.2 million). This was attributed to the positive development of the international and digital businesses while advertising revenues of national newspapers and magazines fell sharply. Other revenues rose 36.3 percent to EUR 264.7 million (previous year: EUR 194.2 million), primarily due to the integration of newly acquired companies into the financials for the entire year.
Segments: National print media highly profitable, very dynamic growth of international and digital businesses
The market environment for the segment National Newspapers worsened during the course of the year. With revenues of EUR 1,277.6 million following EUR 1,290.3 million for the previous year, national newspapers continued to do well. The segment benefited from higher copy prices, which contributed significantly to the increase in circulation revenues of 4.2 percent to EUR 625.8 million (previous year: EUR 600.7 million). However, the advertising revenues of national newspapers suffered as a result of the slow economy. They declined by 6.5 percent to EUR 623.4 million following EUR 667.0 million for the previous year. The segment EBITDA amounted to EUR 348.9 million (previous year: EUR 363.9 million) as a result of a slight decline in revenues, cost increases, wage hikes and moving expenses for the relocation of BILD. The BILD and the WELT Group/BERLINER MORGENPOST posted record results. National newspapers remain highly profitable with an EBITDA margin of 27.3 percent (previous year: 28.2 percent).
The National Magazines segment was also unable to distance itself from the weak economy. Revenues of national magazines declined by 4.0 percent year-on-year to EUR 564.1 million (previous year: EUR 587.8 million). Circulation revenues declined by 2.1 percent and advertising revenues fell by 8.4 percent. Despite declining revenues the profitability of national magazines improved significantly. Thanks to disciplined cost management, lower development and start-up costs and an optimization of the magazine portfolio, the segment EBITDA jumped 20.2 percent to EUR 88.8 million (previous year: EUR 73.9 million) for a new record. The EBITDA margin rose from 12.6 percent to 15.7 percent.
In contrast to national print publications, the international newspapers and magazines posted a slight increase in revenues. Revenues for the segment Print International rose to EUR 409.8 million (previous year: EUR 408.3 million). Both circulation and advertising revenues contributed to this development. Publications in Switzerland and Russia developed especially well. Axel Springer enjoyed a strong rise in the segments earnings. International print publications saw their EBITDA more than double from EUR 10.6 million to EUR 27.8 million. The previous years result was influenced by costs for the discontinuation of development activities for a tabloid newspaper in France.
Digital business remained the driving force behind the Groups growth in 2008. The significant investment in the cross-media integration of print publications with online and mobile portals as well as in new digital activities has paid off. Revenues in the Digital Media segment grew dynamically by 81.7 percent to EUR 378.2 million (previous year: EUR 208.1 million). Digital Media profited from a significant increase in advertising revenues and other revenues. Pro forma revenues for the segment posted organic growth of 24,6 percent. Adjusted for the 2007 dividend from ProSiebenSat.1 Media AG of EUR 23.1 million, the EBITDA of Digital Media rose from EUR 12.6 million (reported EBITDA: EUR 36.7 million) to EUR 20.9 million. The result would have been considerably higher had it not been for the exchange rate effect of EUR -21.9 million which had a negative impact on the result from the participation in Dogan TV Holding A.S.
Revenues in the Services/Holding segment grew from EUR 83.4 million to EUR 99.0 million as a result of the incorporation of the subscription business of PVG Pressevertriebsgesellschaft KG into the subsidiary ims. The EBITDA improved significantly to EUR -0.2 million (previous year: EUR -15.1 million).
Financial situation: net financial debt reduced significantly
Mainly due to the development of working capital the cash flow from operating activities for 2008 declined slightly to EUR 265.1 million (previous year: EUR 283.1 million). However, the cash flow from investment activities improved significantly to EUR 300.6 million following cash outflows in the amount of EUR 1,392.4 million in the previous year. This was, above all, due to income from the sale of the stake in ProSiebenSat.1 Media AG.
The Group also reduced its financial liabilities significantly from EUR 941.1 million to EUR 524.0 million. Net debt thereby decreased from EUR 743.1 million to EUR 369.5 million. Axel Springer also has a short- and long-term line of credit in the amount of EUR 1,095.0 million (previous year: EUR 685.0 million), which was not put to use. Cash and cash equivalents declined from EUR 198.1 million at the end of 2007 to EUR 154.5 million.