Axel Springer’s strategy of international expansion and digital diversification have reaped rewards, with the Berlin-based media group reporting that first half revenues from internet advertising had for the first time exceeded sales at their German newspapers and magazines.
The publisher of Bild and Die Welt saw digital revenues rise from €145m in the first half of 2010 to €357m in the same period this year, largely through acquisitions such as of the French property website SeLoger. Meanwhile, German print advertising revenues fell €24m to €318m.
“The results confirm our strategy,” said Mathias Döpfner, chief executive. “Axel Springer’s digital and international activities are not only the driving forces behind our growth but now account for nearly 40 per cent of our operating profit.”
The Berlin-based group reported an 11.8 per cent increase in revenues although sales at its German national newspaper group fell 3.3 per cent to €565m and those at its German magazines, led by TV guides and women’s titles, fell 4 per cent at €233m.
After stripping out the effect of acquisitions and a joint venture in central and eastern Europe with the Swiss-based media group Ringier, Axel Springer’s revenues rose 4.2 per cent compared with the same period last year.
International revenues were up 53.4 per cent and digital sales were up 30.3 per cent to a combined total of €672m.
An analyst whose company policy forbids public comment said Axel Springer’s digital performance was encouraging, but it was yet to be proved how good a return on capital its acquisitions would be.
Those positive effects offset a tough advertising market at home which saw their German papers lose 8.4 per cent in the second quarter of the year and 6.8 per cent over the whole period.
Mr Doepfner said: “I see no sign that the negative trend among newspapers and magazine can be turned around.”
Adjusted to take account of a share split in June 2010 which saw Axel Springer’s free float leap from 23.5 per cent of equity to 41.1 per cent, earnings per share were down 26.8 per cent from €1.86 to €1.36.
The controlling group of shares in Axel Springer, which has a market capitalisation of about €3.3bn and an enterprise value of about €8.6bn, is owned by the not-for-profit Axel Springer Society.
The group operates in 35 countries publishing more than 240 newspapers and magazines and running about 140 online businesses.
Seperately, the German broadcaster ProSiebenSat.1 confirmed that it would use the €1.2bn in receipts from the sale of its Belgian and Dutch TV assets to pay down debt.
Shares in both media companies sprang back from a bad day on Tuesday, prompted by a sales warning from the German supermarket chain Metro. Axel Springer closed up 9.7 per cent and ProSieben up 1.7 per cent.
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