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Asociación Técnica de Diarios Latinoamericanos

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Boletín Semanal mayo 12, 2019

Group revenues grew organically by 3.2 percent in the first quarter / Adjusted EBITDA increased organically by 4.1 percent / Digital activities further increased their share of revenues and adjusted EBITDA / Focused growth investment in Classifieds Media and News Media / Full-year forecast adjusted due to the sale of @Leisure

Axel Springer recorded further strong growth in its digital offerings in the first quarter of 2019. Their revenues grew organically by 8.9 percent compared to the prior-year quarter. Digital activities increased their share of reported group revenues to 73.8 percent. They also generated 86.6 percent of the adjusted Group EBITDA. Group revenues and adjusted Group EBITDA increased after adjustment for consolidation and currency effects. As expected, the reported key figures were influenced by significant consolidation effects.

At EUR 771.8 million, Group revenues were at the prior-year level (PY: EUR 773.5 million). Adjusted for consolidation and currency effects, revenues increased by 3.2 percent. During the reporting period, earnings before interest, taxes, depreciation, and amortization (EBITDA), adjusted for non-recurring effects, declined slightly by 2.5 percent to EUR 167.0 million (PY: EUR 171.2 million). Organically, on the other hand, they grew by 4.1 percent. The EBITDA margin decreased slightly from 22.1 percent to 21.6 percent. Adjusted EBIT declined by 6.9 percent to EUR 113.4 million (PY: EUR 121.8 million). Organically, it increased by 2.5 percent.

Dr. Mathias Döpfner, Chief Executive Officer Axel Springer SE: “The first-quarter results show that digital classifieds and digital journalism are delivering significant growth for Axel Springer. We will invest more heavily in the potential of growth companies in these areas in the future compared to previous years.”

In the first quarter of 2019, Axel Springer invested in accelerated growth and the further strengthening of its News and Classifieds Media businesses. The aim is to increase the company’s value and performance in the medium to long term so that its dynamic progress can continue in the future. Thus, for example, the Classifieds Media segment was expanded through two strategic acquisitions of job portals. At the beginning of the year, StepStone took over Studydrive, the leading digital platform for students in Europe. This was followed in March by the acquisition of PersonalMarkt Services GmbH (PMSG), one of Germany’s largest compensation analysts. PMSG offers both employees and employers detailed salary comparisons and job offers on various online platforms, such as Gehalt.de.

Axel Springer expanded the News Media segment with the acquisition of paid content specialist CeleraOne. This technology service provider specializes in real-time processing of large data volumes and has been used by Axel Springer for several years in the paid content offerings of WELT and BILD. This acquisition strengthens the company’s digital journalism offerings, its technological and data expertise and its growth business in digital payment models.

The average number of employees at Axel Springer declined slightly in the first quarter by 0.5 percent to 16,282 (PY: 16,365).

Full-year forecast adjusted due to sale of @Leisure

At the beginning of May, Axel Springer announced the sale of its 51 percent majority stake in the @Leisure Group. Assuming that the transaction is completed as expected at the beginning of June 2019, this will result in adjustments to the Group forecast. On completion, Axel Springer expects group revenues for the 2019 financial year to remain at the previous year’s level, having previously anticipated an increase in the low single-digit percentage range. Organically, the Group continues to expect growth in the low to mid-single-digit percentage range.

For the adjusted EBITDA, Axel Springer continues to expect a figure at the prior-year level. Organic growth of the adjusted EBITDA should remain in the low to mid-single-digit percentage range.

When the transaction is completed, the Group expects adjusted EBIT to decline to the low to mid-single-digit percentage range due to increased amortization, having previously forecast a decline in the low single-digit percentage range. Organically, growth in the low single-digit percentage range is still expected.

Adjusted earnings per share will show a decline in the low single-digit percentage range when the transaction is completed, a figure between the previous year’s level and a decline in the low single-digit percentage range having previously been forecast. In organic terms, a rise in the single-digit percentage range is expected.

Net income and earnings per share influenced by non-recurring effects

The group net income adjusted for non-recurring effects and amortization from purchase price allocations declined by 7.2 percent in the reporting period to EUR 75.1 million (PY: EUR 80.9 million). The adjusted earnings per share decreased from EUR 0.63 to EUR 0.57 due to increased interests by other shareholders. However organically, the adjusted earnings per share rose by 1.7 percent. The unadjusted group net income decreased to EUR 55.4 million (PY: EUR 84.7 million). The non-recurring effects comprised equity valuation effects and effects related to the long-term share-based incentive programs. The prior-year figures also included a significant one-time effect from the transfer of the Axel Springer high-rise in Berlin to the Axel Springer Pensionstreuhandverein. At EUR 0.41, unadjusted earnings per share were therefore down on the previous year’s figure of EUR 0.69.

Funding base remains strong

Free cash flow in the first quarter of 2019, excluding the effects of real estate transactions at the company locations, amounted to EUR 89.8 million after EUR 127.4 million in the previous year. At the end of the first quarter of 2019, Axel Springer’s net debt decreased slightly to EUR 1,240.1 million (December 31, 2018: EUR 1,249.2 million).

Of the existing long-term credit lines of EUR 1,500.0 million, EUR 474.0 million was utilized by the end of March 2019 (December 31, 2018: EUR 453.0 million). At the end of the first quarter, the equity ratio stood at 45.3 percent.

Classifieds Media continues to drive growth

During the first quarter, the Classifieds Media segment increased revenues by 8.5 percent to EUR 314.8 million (PY: EUR 290.2 million). The growth was driven both by an operational improvement, particularly in Job Classifieds, and by consolidation effects from the inclusion of Logic-Immo and Universum. On the other hand, the sale of casamundo in the field of Generalist/Other in October 2018 had a counteracting effect. Organically, i.e. excluding consolidation and currency effects, the segment’s revenues increased by 7.3 percent.

Despite negative consolidation effects, the adjusted EBITDA of Classifieds Media improved slightly by 0.5 percent to EUR 113.2 million (PY: EUR 112.6 million). Organically, the increase amounted to 6.2 percent. The segment’s good operating performance was offset by seasonal effects at Universum and start-up losses on the hybrid brokerage activities. Due to selective capital expenditures in marketing, product and technology in both the Jobs and Real Estate subsegments, the EBITDA margin was 36.0 percent (PY: 38.8 percent). The adjusted segment EBIT decreased in the first quarter by 3.5 percent to EUR 91.0 million (PY: EUR 94.3 million), but organically it increased by 3.8 percent.

In the News Media segment, BILD digital performed strongly at the national level, as did the brands INSIDER Inc., UPDAY and eMarketer internationally. The digital offerings’ share of segment revenues rose to 41.7 percent (PY: 36.5 percent). Despite the positive development of digital news offerings, at EUR 341.2 million the segment’s revenues were 2.9 percent down on the previous year’s figure (PY: EUR 351.5 million). Organically, the segment’s revenues declined by 1.6 percent.

At EUR 46.7 million, the adjusted segment EBITDA was 5.4 percent down on the prior-year quarter (PY: EUR 49.4 million). Organically, it declined by 2.3 percent. The EBITDA margin contracted slightly from 14.1 percent to 13.7 percent. Adjusted EBIT declined to EUR 30.0 million (PY: EUR 33.1 million). Organically it also decreased by 5.2 percent.

In the first quarter of 2019, the Marketing Media segment recorded a consolidation-related decline in revenues of 11.6 percent to EUR 104.4 million due to the sale of aufeminin in the previous year (PY: EUR 118.1 million). Organically, on the other hand, the segment’s revenues increased strongly by 11.9 percent.

Adjusted EBITDA increased by 7.1 percent to EUR 25.2 million (PY: EUR 23.6 million). Excluding consolidation and currency effects, adjusted EBITDA grew by 23.5 percent. The segment’s EBITDA margin increased to 24.2 percent (PY: 19.9 percent). The idealo Group in particular made a very favorable start to the current year, contributing significantly to the positive earnings performance. The adjusted EBIT grew by 9.4 percent from EUR 17.6 million to EUR 19.2 million. Organically it rose by a substantial 33.0 percent.