1. January 30. June INTERIM REPORT 2001

Transcription

1 1. January 30. June INTERIM REPORT 2001

2 Group key data 1st half 1st half in a million Sales Change in % Results Net profit Return on sales in % Consolidated operating profit Balance sheet Balance sheet total Fixed assets Fixed assets cover in % Liquid assets Shareholders equity (excl. retained profits) Equity ratio in % Long-term liabilities Capital expenditure Depreciation Share Share price on 30. June (a) * Employees Average no. of employees * Adjusted to the 1:10 share split in November 2000 to facilitate comparison.

3 Interim report Group and Axel Springer Verlag AG Axel Springer Verlag was strongly influenced by the slump in the advertising economy in the first half of Substantial increases in the price of paper and expenditure to safeguard the future of the company also had an effect. The consolidated net profit amounted to g 14 million (previous year g 81 million). The Board of Management expects that the net profit for the year will be considerably lower than in the previous year in spite of restrictive cost management measures. Business environment The German economy developed moderately in the first half of 2001, with an increase of 1.3 % in GDP. The low level of economic growth is attributable primarily to a global economic slowdown. For the first time since 1998, exports were down at the beginning of the year. Domestic demand was considerably lower too: private consumer spending stagnated, in spite of an increase in real disposable income. Considerable increases in fuel and food prices as well as uncertainty about future economic developments made consumers reluctant to spend. Economic growth of 1.0 % is forecast for the year as a whole. Business in the German advertising industry declined substantially in the first half of Gross advertising revenues with classic media dropped by 4.6 % to a total of f 8.5 billion 1

4 adjusted for the new publications included in the ACNielsen Werbeforschung statistics. The significant reduction in advertising revenues is due not only to the poor economic situation but also to the lack of special factors which made 2000 a record year. The main factors were the Internet and stock market boom, corporate take-overs in the telecommunications industry and Expo Adjusted print media advertising revenues (excluding classified ads) amounted to f 4.0 billion ( 7.4 %). The reduction of 1.8 % in television advertising revenues was caused mainly by public-service channels ( 15.4 %), while the private television stations maintained their advertising at practically the same level as in the previous year ( 0.6 %). In spite of double-digit price increases on average, radio advertising fell by 5.9 %. The adjusted advertising revenues generated by newspapers in the brand and services field decreased by 8.3 % to f 1.8 billion. Newspapers were the primary beneficiaries of the special factors in the previous year. The reduction in advertising business by national newspapers ( 11.9 %) and regional subscription newspapers ( 9.1 %) was, however, particularly large by comparison with the same period the previous year. Classified advertising revenues decreased with motor vehicle and property ads in particular. The adjusted gross advertising revenues of general-interest magazines were down by 6.2 % at f 1.9 billion. Current affairs magazines ( 11.6 %), TV guides ( 11.2 %) and the business press ( 4.1 %) suffered from particularly large revenue shortfalls. Women s and youth magazines as well as online/computer magazines, on the other hand, succeeded in increasing their advertising revenues. 2

5 The generally low level of consumer spending had a considerable impact on the retail press market too. While newspaper and magazine subscription figures remained just about as high as in the first half of 2000, there was a large decrease in newsstand sales of generalinterest magazines in particular. The retail press trade reported a reduction of about four per cent in sales volume and value. Total circulation of the daily and Sunday newspapers registered with IVW decreased by 0.8 %. A drop of 1.4 % was registered in newsstand sales; this development was due exclusively to the market for regional subscription newspapers. Total sales of general-interest magazines fell 1.1 % short of the figure reported in the same period the previous year, primarily because of the substantial drop in newsstand sales. Paid circulation per issue here was down by 4.8 % on average. The high competitive pressure continued with the TV guides and women s magazines. The positive development in computer magazine circulation appears to have come to a standstill for the time being; business magazines suffered from an appreciable reduction in demand in line with the stock market trends. 3

6 Newspapers The company Axel Springer Verlag was affected by the developments on the retail and advertising markets in the first half of 2001 too. Sales were increased by 2.2 % even so. Even more restrictive cost management was introduced, primarily because of the decline in advertising business and the higher paper costs. In spite of the difficult market conditions faced by the entire industry, the determined investment programme to guarantee the future of the company was continued and the objective of safeguarding the core business while broadening the basis for further business growth was maintained. The existing operations were therefore developed systematically and many new activities were initiated both in Germany and abroad. Following a change in the trend from the declining circulation figures recorded in preceding years, BILD continued to expand its leading position as the biggest German newsstand paper and sold more copies than in the same period the previous year, with an average circulation of about copies. BILD AM SONNTAG is still the biggest Sunday newspaper in Germany after the thorough modernisation of its visual appearance and thematic coverage, with an average paid circulation of about copies. The basis for more efficient and economical co-operation was created by the establishment on 1. January 2001 of a highly networked new editor-in-chief structure for BILD and BILD AM SONNTAG. Co-operation between departments has been improved and the quality of the reporting has been increased even more. 4

7 DIE WELT continued its positive circulation trend in the first half of The main features of the newspaper s development were systematic modernisation and further expansion of business reporting. The modernisation process at WELT AM SONNTAG was continued with the appointment of a new editor-in-chief in January, while reporting is now focussing even more systematically on the requirements of Sunday readers. Following the relocation of the main editorial staff to Berlin in July, advantage is being taken of the closeness to the political institutions and a further improvement has been made in the basis for co-operation with DIE WELT. In spite of the price increase that was made, WELT AM SONNTAG upped its circulation substantially in the course of the first half of the year. The company s position on the Berlin newspaper market which continues to be highly competitive has been strengthened. The new editor-in-chief of B.Z has, for example, succeeded in increasing circulation. BERLINER MORGEN- POST is still proving to be successful in spite of the tough competitive situation and is maintaining its strong position on the classified ad markets. Net paid circulation, IVW, six-monthly average 2001 Bild Bild am Sonntag Computer Bild Computer Bild Spiele Die Welt Welt am Sonntag Euro am Sonntag Finanzen Aktienresearch Hamburger Abendblatt Berliner Morgenpost B.Z B.Z. am Sonntag

8 Following the change in the newspaper s editor-in-chief in June, HAMBURGER ABENDBLATT has been appearing with updated and additional design elements since early August and is strengthening its position on the Hamburg newspaper market as a result. The free daily newspaper KÖLN EXTRA was relaunched completely in March to position it even more systematically in the fight against the continued distribution of daily newspapers free of charge. Axel Springer Verlag responded to the plan by the Schibsted Group to introduce free newspapers on a national basis by preparing a determined counter-attack in several German cities. This prompted Schibsted to announce its withdrawal from Germany in July. It was possible to discontinue KÖLN EXTRA in July. In view of Axel Springer Verlag s positive experience with its innovative newspaper concept, a market test will be carried out in the second half of the year with the aim of determining acceptance of the product as a newsstand newspaper for young readers. Magazines The operations in the magazines field were dominated by progress in development of the concept and quality of existing publications, the launch of new magazines and structural optimisation processes. Two new publications were, for example, introduced in both Germany and abroad in the first half of the year. The TV guides published by Axel Springer Verlag were strengthened further by restructuring and reorganisation measures, involving in particular the pooling of the editorial teams of HÖRZU, FUNK UHR, TVNEU and BILDWOCHE to form a central editorial team for TV and radio data. BILDWOCHE was revamped in its content and visual design and was integrated in the TV guide operations. 6

9 BILD DER FRAU continued its success story in the first half of 2001 too. The weekly women s magazine expanded its position as market leader in the fiercely competitive segment of women s magazines. With the help of a relaunch, JOURNAL DER FRAU succeeded in developing positively in the segment of fortnightly women s magazines. An original summer campaign in which the classic format and the pocket format were supplied at the same time a first on the German press market enabled ALLEGRA to increase circulation considerably. The successful family magazine FAMILIE&CO celebrated its fifth anniversary in February By comparison with the first half of the previous year, paid circulation increased by 7.8 % to about copies. Axel Springer Verlag launched the men s lifestyle magazine MAXIM on the German market in May There is a publication with the name MAXIM in ten different countries and it is one of the most successful men s magazines in the world. Total sales of the first issues, which were marketed at an introductory price, have already exceeded expectations at more than copies (company figure). Net paid circulation, IVW, six-monthly average 2001 Hörzu Funk Uhr TVneu Bildwoche Auto Bild Sport Bild Bild der Frau Journal für die Frau Allegra Familie& Co YAM! Mädchen Popcorn Musikexpress Hammer

10 All the rights to the magazines published by az Auto Verlag and "Autotest & Tuning Verlag" as well as to the relevant Internet domains were acquired with effect from 1. January The fortnightly specialinterest magazine AUTO BILD MOTORSPORT was launched in January. Together with AUTO BILD and all its special magazines, Axel Springer Verlag has succeeded in positioning itself convincingly in the car magazine market. The content of the magazines is being exploited digitally in the context of the planned car portal AUTOBILD.DE and is available in the Internet. The youth magazine YAM! that was launched in September last year by Axel Springer Young Mediahouse, Munich, has exceeded the publisher s expectations substantially, with an average paid circulation of about copies and a very positive advertising business. Circulation of POPCORN was increased by 49.2 % to about copies compared with the same period the previous year by improving the editorial quality and by carrying out a variety of marketing activities. In the course of the process to concentrate the Axel Springer Verlag financial publications, the magazine for investors AKTIENRESEARCH launched in April 2000 was integrated in Finanzen Verlag, Munich. Co-operation between AKTIENRESEARCH and the other financial publications EURO AM SONNTAG and FINANZEN is to be intensified as a result, while the position of Finanzen Verlag in the market for information-oriented finance publications is to be strengthened too. Axel Springer Verlag has held a 100 % interest in Finanzen Verlag since the beginning of

11 Operations on foreign markets The newspaper and magazine publishing companies owned by Axel Springer Verlag outside Germany started numerous new activities in the first half of Axel Springer Polska launched the monthly business magazine PROFIT, which reports on all the issues covered in capable business journalism, on the market at the end of April. Together with CompuTel, a subsidiary of Axel Springer Polska acquired "Kontakt Telemarketing". The new company has been given the name Axel Springer Kontakt and is concentrating on telemarketing, audiotex and mobile services. Axel Springer-Ungarn acquired a majority holding in the publishing company Zöld Újság, which produces the biggest daily business newspaper in Hungary (VILÁGGAZDASÁG), backdated to 1. January Axel Springer Verlag bought an interest of 75 % in the publishing company Automedia in Prague, Czech Republic. Automedia is one of the leading Czech publishers of car magazines, including SVĔT MOTOR U and AUTOTIP, the fortnightly licensed edition of the German magazine AUTO BILD. Hobby Press, Madrid, launched the monthly computer game magazine COMPUTER HOY JUEGOS in April. 9

12 Books At the beginning of the year, Axel Springer Verlag took over the Wilhelm Heyne publishing company, Munich, which is being integrated in the Ullstein Heyne List publishing group. The thirdlargest book publishing company in Germany, which produces a number of successful major international bestsellers by authors such as John Grisham, Stephen King, Nicholas Sparks and John le Carré, is being created by the formation of Ullstein Heyne List. Electronic Media/ Multimedia The first stage of the news and entertainment portal BILD.DE went online on 1. August T-Online International AG will be acquiring a 37 % interest in the company planned for BILD.DE. This transaction still has to be approved by the supervisory bodies and cartel authorities. In the difficult market environment of the Internet business, Axel Springer Verlag concentrated on a cost-cutting programme for the current operations, on careful expansion of the online versions of the existing print brands as well as on consolidation of the equity holding portfolio. CompuTel, the market leader for addedvalue telephone- and fax-based services in Germany, expanded its product range in the mobile communication field in particular. Printing Axel Springer Verlag is setting new standards for magazine production with the extensive modernisation of its rotogravure printing plant in Ahrensburg. Some of the existing equipment is gradually being replaced by more modern and efficient machinery by the end of 2003, with an investment volume of about f 70 million. 10

13 Results Axel Springer Verlag was strongly influenced by the slump on the advertising market. The results were also depressed by substantial increases in paper prices as well as by expenditure to safeguard the future of the company. The consolidated operating profit in the first half of 2001 amounted to f 34 million (previous year f 127 million). The consolidated net profit totalled f 14 million (previous year f 81 million). The Board of Management expects that the net profit for the year as a whole will be considerably lower than in the previous year in spite of the restrictive cost management measures. because of its small free float. The share price underperformed the MDAX index almost the whole time during the first half of Share price Index 2. January 2001 = January 2001 July 2001 The Axel Springer share was affected particularly severely by the negative developments on the stock markets Axel Springer Verlag AG MDAX

14 Liquid assets totalled f 105 million on 30. June Due to the decline in profits, the high investments particularly at Group companies as well and the dividend payment, they were f 259 million lower than in the previous year. The long-term liabilities increased by f 3 million to f 109 million. Shortterm loan liabilities amounted to f 101 million. In the following consolidated figures 13 companies were included for the first time in the last twelve months. The main additions were the French publishing group Media Mag, Wilhelm Heyne Verlag, GMZ Druckerei and Buch- und Presse- Großvertrieb Hamburg. Three companies were no longer consolidated. Two companies were each merged with another company as a result of restructuring exercises. The previous year s figures were not adjusted. The impact of the changes in the companies consolidated are indicated separately below where they are material. Sales Sales in the first half of 2001 increased by f 30 million (+ 2.2 %) to f million. The companies consolidated for the first time accounted for f 75 million. Retail sales amounted to f 539 million and were thus f 24 million (+ 4.6 %) higher than in the previous year. Advertising revenues were down by f 39 million ( 6.1 %) at f 582 million. Other revenues rose by f 45 million ( %) to f 307 million because of the new consolidated companies. 12

15 Sales by segment in a million 1st half 1st half Foreign sales increased by f 31 million ( %) to f 221 million, about two thirds of this increase being attributable to new consolidated companies. This meant that Axel Springer Verlag generated 15.5 % of its sales abroad (previous year 13.7 %) Miscellaneous Advertisements Retail Newspaper sales amounted to f 751 million and were therefore f 26 million ( 3.4 %) lower than in the previous year. Retail sales increased by f 9 million (+ 2.8 %) to f 317 million. Sales and circulation growth was generated primarily by BILD and DIE WELT. The newspapers published by Axel Springer Verlag were affected by the negative developments on the advertising markets too: advertising revenues decreased by f 35 million ( 7.5 %). Practically all of the company s newspapers suffered from a drop in their advertising revenues. Sales by division in a million 1st half 1st half Other revenues Contract printing Electronic Media Books Magazines Newspapers

16 The magazines reported an increase of f 11 million (+ 3.3 %) in sales, with a contribution of f 14 million from the new consolidated companies. This meant that total magazine sales amounted to f 370 million. Magazine retail sales increased by f 15 million (+ 7.3 %) to f 222 million. More than two thirds of this growth were generated by the publications of the Media Mag Group as well as by YAM!, MAXIM and AUTO BILD MOTORSPORT. Among the existing magazines, BILD DER FRAU, FAMILIE&CO and POPCORN recorded circulation and sales growth. The magazines obtained f 4 million ( 2.0 %) lower advertising revenues than in the first half of the previous year. The total magazine advertising revenues amounted to f 148 million. Following the advertising boom year in 2000, advertising revenues were down at nearly all of the magazines published by Axel Springer Verlag. Book sales doubled over the same period the previous year to f 77 million due to the take-over of the Heyne publishing company. The electronic media suffered from a sales shortfall of f 18 million ( 31.2 %). The reasons for this were lower sales by CompuTel and Interactive Media as well as the elimination of AS TV International from the consolidated figures. Contract printing sales went up by f 7 million ( %), primarily due to consolidation of GMZ Druckerei for the first time. The other revenues increased by f 17 million ( %). The merchandise sales they include increased by f 14 million ( %) due to the consolidation for the first time of Buch- und Presse-Großvertrieb Hamburg. The transport revenues were up by f 3 million (+ 5.4 %). 14

17 Expenditure Total expenditure before tax increased by f 127 million (+ 9.6 %) compared with the same period the previous year. f 76 million of this figure are attributable to new consolidated companies. The cost of materials went up by f 47 million ( %). The new companies contributed 8.0 % of this. Paper costs increased by f 15 million ( %), primarily because of new activities and high price increases. Personnel costs rose by f 42 million ( %) or if the new consolidated companies are disregarded by f 28 million (+ 6.9 %). Tax expenditure went down by f 42 million due to the decline in business. son with the same period the previous year is due to the launch of new operations as well as to the inclusion of additional companies in the consolidated accounts. Employees 1st half % Industrial employees Employees In the first six months of 2001, Axel Springer Verlag maintained an average of employees on the payroll. The increase of employees by compari % Salaried employees Total % Editorial staff

18 Investments Axel Springer Verlag invested a total of f 100 million (previous year f 109 million) in the first six months of Investments in tangible and intangible assets accounted for f 84 million. The bulk of these investments related to Capital expenditure and depreciation in a million 1st half 2001 Capital expenditure 100 Depreciation Investments in tangible and intangible assets Financial assets 16 modernisation of the rotogravure and offset printing plants in Ahrensburg as well as to the new office building in Berlin. Other investments were in the acquisition of rights and licences and in EDP and other office equipment. The investments in financial assets amounted to f 16 million (previous year f 46 million). The acquisition of Automedia in the Czech Republic and "Kontakt Telemarketing" in Poland as well as the financing of equity holdings were major individual items. A further amount of f 85 million was invested in the acquisition of shares in consolidated companies. Depreciation totalled f 66 million (previous year f 53 million). Berlin, August 2001 Axel Springer Verlag AG Board of Management

19 If you require further information about this Interim Report, please contact: Axel Springer Verlag AG Finance and Accounting/ Corporate Controlling Axel-Springer-Platz Hamburg Germany Phone: ++49 (0) Fax: ++49 (0) finanzinfo@asv.de The Interim Report and up-to-the-minute information on Axel Springer Verlag are available on the Internet as well: Printed on 100 % recycled paper.

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