Axel Springer Predicts Earnings Decline on Digital Spending

Axel Springer AG, Europe’s largest newspaper publisher, forecast lower profit this year because of spending to accelerate its shift to digital publications amid a declining print business.

Earnings before interest, taxes, depreciation and amortization will probably fall by a “single-digit percentage” this year, Berlin-based Axel Springer said today. Analysts project an increase of 4.1 percent to 654 million euros ($854 million), data compiled by Bloomberg show.

Axel Springer, the publisher of Germany’s largest tabloid Bild, last year added online classifieds pages in countries including Poland and Belgium. Sales from digital assets rose 22 percent to 1.17 billion euros in 2012, for the first time overtaking those of the German newspapers.

“The traditional segments serve as considerable cash generating units and the digital segments are driving growth and profitability,” Harald Heider, an analyst at DZ Bank AG, wrote in a note.

Springer shares fell as much as 6.7 percent, the biggest intraday drop since April. The stock was down 6.4 percent at 33.96 euros at 9:14 a.m. in Frankfurt, valuing the company at 3.4 billion euros. The stock was little changed in the past 12 months through yesterday, compared with a 21 percent gain for Lagardere SCA (MMB) and Informa Plc (INF)’s 18 percent increase.

Digital Plans

Jointly with Zurich-based Ringier AG, Springer last year bought Poland’s largest Web portal Onet.pl, and its joint venture with General Atlantic LLC acquired an 80 percent stake in Belgian real-estate portal Immoweb. The German company also owns publications including Germany’s Die Welt, websites like Aufeminin.com and advertising network Zanox.

Springer last year sent some of its top executives, including Bild’s editor-in-chief, to Silicon Valley to establish contacts there and look for investments. Last month, it set up a 50-50 partnership with Plug and Play Tech Center to foster startups in Germany and Europe.

Higher investments and acquisitions will help boost full- year revenue by a “low single-digit” percentage, the company said.

The company today proposed a dividend of 1.70 euros for 2012, at the same level as a year earlier and below the 1.80 euros estimate compiled by Bloomberg.

“The year 2012 marked an important turning point for Axel Springer,” Chief Executive Officer Mathias Doepfner said in the statement. “We intend to accelerate the digital transformation of the entire group, in order to further bolster our position of digitization pioneers.”

To contact the reporter on this story: Cornelius Rahn in Berlin at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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