Axel Springer says profit rises on sales, new titles
Axel Springer, Europe's biggest newspaper publisher, said Q3 profit climbed 14% as German economic growth spurred advertising sales and new publications added to revenue.
Net income of Axel Springer AG, in the three months through September rose to €61 million ($78 million) from €53.6 million a year earlier, the company said in a statement yesterday. Sales fell 1.6% to €563 million after Springer last year merged its gravure printing unit with that of rival Bertelsmann AG. Germany's economy is on course for the fastest pace of expansion since 2000, allowing companies to spend more on newspaper and magazine ads. Springer's advertising sales climbed 3.9% in the first nine months of the year. The Berlin-based company also introduced new titles as part of a renewed focus on newspapers, magazines and the internet business. Springer is „getting ahead in all strategic areas” as the company is „strengthening its market leadership in Germany, expands its international business and increasingly launches digital offers,” CEO Mathias Doepfner said in the statement. Regulators in January quashed Springer's plan to buy ProSiebenSat.1, Germany's biggest private broadcaster, for as much as €4.2 billion. Shares of Springer rose 85 cents, or 0.7%, to €123 as of 10:53 a.m. in Frankfurt yesterday, valuing the company at €4.2 billion. The stock has risen 14% this year.
Springer yesterday raised its forecast for 2006 earnings before interest, tax and amortization, saying it will rise to a record. Before yesterday, the company had said Ebita in 2006 would remain at the previous year's level or perhaps exceed it. The Ebita margin rose to 15.4% in the first nine months of 2006 from 14.1% a year earlier and Springer aims to keep the margin above 15% in the future, Doepfner said on a conference call yesterday. Springer, named after its founder and controlled by the Springer family, is the publisher of Bild newspaper, Germany's biggest-selling tabloid that draws more than 12 million readers in Germany every day and is the world's sixth-largest newspaper by circulation.
Doepfner reiterated private-equity company Hellman & Friedman LLC may sell a 10% Springer stake this year, which may increase the stock's trading volume and free float. The company has held a 19.4% stake in Axel Springer since 2003. Hellman & Friedman will probably sell the stake through the German stock market and some shares could also be sold to international investors in a private sale, Doepfner said. The limited number of freely traded shares and the low volume of trades have „prevented the stock from showing its real value.” Doepfner said. Springer's shares could be a candidate for Germany's MDAX index of 50 medium-sized companies after the stake sale, he said. About 11% of Springer's shares are currently freely traded. Springer also aims to keep its 12% stake in ProSiebenSat.1 for now and will decided about a potential sale after the broadcaster has been sold, Doepfner said. ProSiebenSat.1's owners asked media companies and financial investors whether they are interested in buying the broadcaster after the attempt to sell their 50.5% stake to Axel Springer failed in January. Mediaset SpA, Italy's largest television broadcaster, on Tuesday said it's interested in buying the broadcaster.
Springer's Fakt tabloid became Poland's most-read newspaper two months after its 2003 debut and has a daily circulation of about 500,000 copies. It started another Polish daily, called Dziennik, in April. The Russian edition of the Forbes magazine has „reached breakeven” in 2006 less than one year after its start in April 2005, the company said earlier this year. The company generated 16% of its sales outside Germany in the first nine months of the year, compared with 15.5% a year earlier and about 2% in 1998. With the purchase of ProSiebenSat.1, Springer had planned to create a second German media company with print and television operations to challenge Bertelsmann in the country's €30 billion advertising market. The withdrawal by Springer followed a ruling by cartel authorities that blocked the purchase on grounds that a combination would crush competition in Germany's media industry. Doepfner also yesterday said Springer has created a new unit to expand its electronic media business. Springer in July agreed to buy a majority stake in Internet company Idealo Internet GmbH, which lets users compare prices from different vendors for consumer electronics, flights, DVDs and CDs on the Internet. (Bloomberg)
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