Interim Report January 1 to September 30, 2004 Group Key Data
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INTERIM REPORT JANUARY 1 TO SEPTEMBER 30, 2004 GROUP KEY DATA Q1 – 3/2004 1) Q1 – 3/2003 1) Change in d million in d million in % Sales 1 831.2 1 788.8 2.4 Profit EBITA 2) 261.8 163.7 59.9 EBITA margin in % 14.3 9.2 DVFA/SG income 133.3 61.4 117.1 Net income 126.1 106.2 18.7 Cash flow from operating activities 202.5 258.5 – 21.7 Capital expenditure 89.2 115.2 – 22.6 Balance sheet total 3) 2 312.8 2 182.8 6.0 Share in c DVFA/SG earnings per share 4) 4.36 1.81 140.9 Closing price 5) 88.20 54.50 61.8 Number of employees Average 11 417 11 740 – 2.8 1) Q1 – 3: January 1 to September 30 2) Result before taxes, interest and goodwill amortisation, adjusted for extraordinary items 3) As of September 30, 2004 and December 31, 2003 4) Calculation basis: 30.6 million shares in Q1 – 3/2004 (excluding own shares), 34.0 million shares in Q1 – 3/2003 5) As of September 30, 2004 and September 30, 2003 EBITA/EBITA margin (Q1 – 3) DVFA/SG income (Q1 – 3) in c million in c million 300 180 14.3% 4.36 c 250 150 200 9.2% 120 1.81 c 150 90 100 60 50 30 2003 2004 2003 2004 EBITA DVFA/SG income EBITA margin DVFA/SG earnings per share 1 INTERIM REPORT Axel Springer Group In the first nine months of the 2004 financial year, Axel Retail press markets continue to decline Springer improved earnings before interest, tax and Ongoing weak demand cut across all industries. In the retail amortisation (EBITA) from d 163.7 million in the pre- sector, the expected stabilization of demand did not materialize. vious year to d 261.8 million. The net income for the Net paid circulation for newspapers and magazines declined period increased from d 106.2 million to d 126.1 million. by 3%. Across the industry, press sales were down 1%. The conclusion of a settlement agreement in the con- text of the insolvency scheme process at Taurus TV With 380 daily and Sunday newspapers registered with the GmbH (Kirch settlement) contributed d 92.6 million circulation organization IVW, total sales declined year-on-year to EBITA and d 62.3 million to net income. Net income in the first three quarters to 26.2 million copies. This was a of the previous year was impacted by non-recurring decline of 2.4% against the first three quarters of 2003. News- effects from company disposals. In the first nine months, stand sales lost 4.7%, subscriptions declined by 1.9%. sales increased by 2.4% year-on-year. Both circulation and advertising revenues increased. On the basis of The number of general-interest titles registered with IVW ongoing success in the introduction of new newspapers increased by 13 to 822. In the first nine months, total IVW and magazines combined with further cost cutting sales at 124.7 million copies per issue receded by 0.3% year- effects and the result of the first nine months, the on-year. Newsstand sales dropped by 2.5% while subscriptions Management Board continues to expect that sales and developed stable (+0.3%). This includes circulation in member- EBITA for the whole of the 2004 financial year will be ship magazines. higher than 2003, even before adjustment for the Kirch settlement. While in the newspaper market new accents were set primarily for young readers with launches of inexpensive titles in tabloid format, predatory competition continued via the low copy prices for weekly women’s press and TV guides. In the ECONOMIC ENVIRONMENT Electronics/Entertainment segment, imitation products with lower prices began to push onto the market for the first time. For the first nine months of the year, the leading economic institutes estimate real growth of 1.6% against the comparable period of the previous year. In the same period, private con- sumption declined by 0.3%. Consumer demand is still nega- tively impacted by lower employment figures. For the first nine months, the inflation rate was 1.6%. Continuing stability in the advertising market According to Nielsen Media Research, gross advertising sales of classical media in the first nine months of 2004 (excluding classified ads) posted 5.8% growth year-on-year. Gross advert- ising investment of brand and service companies and large retailers (including media advertisement) totaled a 12.7 billion. However, decisive in business terms is the decisive net devel- opment. Here the trend was considerably less favorable. This was due to ongoing pressure on conditions. The classified ads market in particular, a central source of income for subscriber newspapers, experienced further decline in the family, travel and jobs vacancies market. 2 BUSINESS DEVELOPMENT The construction of the new office and business premises in Berlin was concluded as scheduled. The process of bundling In the first nine months, Axel Springer increased EBITA from central group management and service functions at the main a 163.7 million to a 261.8 million. Net income increased from office in Berlin with the objective of achieving further improve- a 106.2 million to a 126.1 million. The conclusion of a ments in efficiency was successfully completed in the first settlement agreement in the context of the insolvency scheme half of the year. process at Taurus TV GmbH contributed a 92.6 million to EBITA and a 62.3 million to net income. The prior-year figure Newspapers was influenced by extraordinary earnings from company dis- In the reporting period, BILD considerably expanded advertising posals. revenues with brand companies and the retail business as well as with advertising cooperations. BILD reached an average In the first nine months, the company generated a 2.4% year- circulation of 3.8 million copies. on-year sales increase, with both circulation and advertising revenues moving up. Ongoing cost management in the core With a revised contents and optical concept, BILD am SONNTAG business offset the start-up losses of new titles. has offered more topicality, service and sport since August. The main part of the newspaper has been extended from 48 Axel Springer continues to launch new titles. In Germany to 64 pages, 8 of which are devoted to more sports reporting. the company launched the fortnightly TV guide TV DIGITAL The positive trend in the advertisement and insert business at in March. In September the finance magazine FONDS&CO, BILD am SONNTAG continued. the literary magazine DER FREUND and the classified ads newspaper AUTOBILD.DE-AUTOMARKT was started. FAKT, the Polish daily started in October 2003, has established itself as the largest daily newspaper in the country with more than 3 million readers. In October 2003, Axel Springer launched Newspapers in Germany REGGEL, the first modern quality newspaper for the Budapest Net paid circulation, IVW, average Q1 to Q3 2004 area. In the third quarter, Axel Springer Budapest launched two new magazines, AUTO BILD and GLAMOUR. The Rus- sian subsidiary Axel Springer Russia introduced also two BILD 3 843 451 new titles with FORBES RUSSIA and RUSSKIJ NEWS- BILD am SONNTAG 2 102 010 WEEK. The RPG (Romanian Publishing Group), in which Axel Springer has a 40% stake, launched the women‘s maga- DIE WELT 203 914 zine SANA in Rumania. WELT am SONNTAG 403 114 Axel Springer expanded the international licensing business. HAMBURGER ABENDBLATT 278 406 With five new licensed editions this year (Estonia, Finland, Slovakia, Latvia, Thailand), AUTO BILD is the fastest growing BERLINER MORGENPOST 151 721 international licensed title. In September, COMPUTER BILD B.Z. 230 577 started with a new offshoot in Lithuania. B.Z. am SONNTAG 129 867 EURO am SONNTAG The women’s magazine ALLEGRA, the TV guide TV MÜSOR 109 510 in Hungary and the car magazine AUTO SUKCES in Poland were discontinued. 3 WELT and WELT am SONNTAG kept advertising revenues Magazines in Germany stable in the first nine months. Since August, WELT am Net paid circulation, IVW, average Q1 to Q3 2004 SONNTAG has had a new modern layout, with a revised structure and new contents. After successful trials in Berlin and Frankfurt am Main, the launch of WELT KOMPAKT was HÖRZU 1 729 111 1) continued across Germany with extension of the distribution TV DIGITAL 1 040 811 FUNK UHR to Munich, Dusseldorf and parts of the Ruhr area. WELT 927 994 BILDWOCHE 321 248 KOMPAKT is the first regional quality newspaper in Germany TV NEU 296 346 in the compact tabloid format and the third national news- paper founded in the last 50 years. BILD der FRAU 1 273 904 FRAU von HEUTE 483 021 The restraint of the advertising market in the first nine months JOLIE 331 785 of the financial year was also felt in Berlin at the BERLINER JOURNAL für die FRAU 305 149 MORGENPOST and B.Z./B.Z. am SONNTAG. With modestly positive signals from the retail sector and the property markets, COMPUTER BILD 841 362 the two newspapers asserted their market position. COMPUTER BILD SPIELE 622 816 AUDIO VIDEO FOTO BILD 531 474 With net paid circulation of 278 000, the HAMBURGER ABENDBLATT developed more positively than the overall AUTO BILD 680 700 market of regional newspapers. In both the retail and advertising AUTOMOBIL TESTS 98 738 AUTO BILD MOTORSPORT 67 981 market, the company defended its leading position in the AUTO BILD ALLES ALLRAD 68 442 Hamburg region. AUTO BILD TEST & TUNING 57 186 Retroactive to January 1, 2004, Axel Springer has aquired SPORT BILD 490 977 a 14.5% share in Westfalen-Blatt Zeitungsverlage GmbH, one of the largest regional newspapers in North Rhine-Westphalia.