Axel Springer Declines After Classifieds Growth Disappoints

  • Commerzbank analyst Sonia Rabussier says momentum missing
  • Stock pares decreases after falling 6.7% earlier Wednesday

Axel Springer SE fell the most in three weeks in Frankfurt after the first-quarter performance of its online classified-advertising business failed to impress investors.

While the German publisher’s total earnings were broadly in line with analysts’ estimates, organic growth at the classified business was below expectations, according to Sonia Rabussier, an analyst at Commerzbank AG. The Berlin-based company’s shares declined 1.5 percent, the steepest one-day drop since April 20, to 49.47 euros. The stock fell as much as 6.7 percent earlier on Wednesday.

“If you look at the quality of the numbers in detail, especially at the classifieds business, they’re slightly weaker than expected,” Rabussier said by phone. “There is momentum missing.”

Axel Springer is relying on an expansion to English-speaking markets and its online classifieds business to replace declining revenue from print products. The company’s digital activities accounted for 62 percent of sales and 70 percent of earnings before interest, taxes, depreciation and amortization last year.

First-quarter sales were 783.4 million euros ($892 million), trailing the average analyst estimate of 790.8 million euros. Adjusted net income rose 13.3 percent to 65.3 million euros. The performance of its paid products and marketing business were “slightly below” expectations, JPMorgan analyst Marcus Diebel said in an e-mailed note.

Axel Springer’s performance contrasted with that of Norwegian peer Schibsted ASA, which reported first-quarter pretax profit and operating revenue exceeding estimates. JPMorgan says the positive surprise was driven by strong earnings at the online classifieds and Swedish media businesses. Schibsted advanced 12 percent to 268.4 kroner in Oslo.

Axel Springer is "fully on course" when it comes to reaching full-year targets, Chief Executive Officer Mathias Doepfner said on a call with reporters.

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