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Axel Springer H1 profit rises on new titles

Axel Springer AG, Europe's biggest newspaper publisher, said first-half profit climbed 10% because of higher advertising sales and as new publications added to revenue. Net income rose to €111.4 million from €101.3 million a year earlier, the Berlin-based company said in an e-mailed statement yesterday. Sales dropped 1.7% to €1.17 billion after the company last year merged its gravure printing unit with that of competitor Bertelsmann AG. Springer is focusing on newspapers and magazines after regulators in January quashed an agreement to buy ProSiebenSat.1, Germany's biggest private broadcaster, for as much as €4.2 billion. The company yesterday said full-year operating profit may gain. "The new publications are a success with advertisers and readers," Chief Executive Officer Mathias Doepfner told reporters yesterday. The company is "monitoring" a numbers of markets to start new titles, including Eastern Europe, Russia, France and Spain, he said. Shares of Springer rose €1.15, or 1.1%, to €109.15 in Frankfurt yesterday, valuing the company at €3.7 billion. Springer's Fakt tabloid became Poland's most-read newspaper two months after its 2003 debut and has a daily circulation of more than 500,000 copies. It started another Polish daily, called Dziennik, in April. 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.

The company expects 2006 profit before interest, taxes and amortization to "remain at the previous year's level or perhaps exceed it" because of "strict cost management and the positive development of existing publications." Earlier this year, Springer had said Ebita could also drop in 2006 depending on costs to start new titles. Doepfner yesterday ruled out that scenario as "we have more planning security and business in the first half was very encouraging." Springer has a 44% share of the Polish newspaper advertising market, less than three years since starting its first publication in the country, the company said yesterday. The Russian edition of the Forbes magazine has "reached break-even" in 2006 less than one year after its start in April 2005, the company said earlier this year.

The "improving economic situation" in Germany and the "growing willingness of consumers to spend" will help advertising revenue to grow further in the second half of the year, the company said. 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. (Bloomberg, Világgazdaság)