Axel Springer First-Quarter Profit Advances on International, Online Sales
Axel Springer AG (SPR), Europe’s largest newspaper publisher, said first-quarter profit before some items rose 6.5 percent as international and online-business revenue made up for a weaker German advertising market.
Earnings before interest, taxes, depreciation and amortization climbed to 126.9 million euros ($182 million) from 119.2 million euros a year earlier, the Berlin-based company said today. Analysts had predicted 129 million euros in Ebitda, the average of nine estimates. Sales gained 11 percent to 736.7 million euros, beating estimates.
The publisher of Bild newspaper is relying on increased income from online classifieds portals such as France’s SeLoger.com, and on consumers paying for entertainment and news on mobile devices. Axel Springer forecasts a “slight” decline in revenue at its German print division this year, and that will be offset by international and digital sales. The company and rivals including Rupert Murdoch’s News Corp. (NWSA) and Time Warner Inc. (TWX) benefited last year from a revival in ad spending.
“Axel Springer has the advantage that they have a very solid print business, from a competitive point of view, with a very strong cash flow, in combination with structural growth areas like digital businesses and operations abroad,” said Jochen Reichert, an analyst at MM Warburg Investment Research in Hamburg with a “buy” recommendation on the shares.
Axel Springer rose as much as 4.30 euros, or 4 percent, to 112.25 euros, the biggest intraday increase since March 16, and was up 2.3 percent as of 1:24 p.m. in Frankfurt trading. That pared the stock’s decline this year to 9.5 percent, giving the company a market value of 3.64 billion euros.
First-quarter net income gained 1.1 percent to 63 million euros, the company said.
Axel Springer bears the name of the journalist who established the company in 1946. He called for reunification of Germany and laid the foundation stone for the publishing house, now the company’s headquarters, adjacent to the Soviet sector in Berlin in 1959, a stone’s throw from Checkpoint Charlie.
In the 1980s, Axel Springer started its eastward expansion in Hungary and is now present in 35 countries with more than 240 newspapers and 140 online businesses.
Digital and international sales rose 26 percent and 58 percent, respectively, during the quarter while national newspaper sales in Germany were down 3.3 percent.
The company is looking to use SeLoger.com’s know-how to expand its real-estate classifieds businesses organically and through acquisitions in growth markets, primarily in eastern Europe as well as in Asia, India and South America, Chief Executive Officer Mathias Doepfner said on a conference call today.
Axel Springer is targeting half of its revenue to be made from digital media channels within seven years. It made 29 percent of sales from those businesses in the first quarter.
“We laid a strong foundation in the first quarter to be able to achieve our goals for the year as a whole,” Doepfner said in the statement.
Axel Springer is about 52 percent owned by the Axel Springer Gesellschaft fuer Publizistik, of which the majority is owned by Friede Springer. She also has a 7 percent direct ownership stake in the company, according to Bloomberg data.
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