INTERIM REPORT JANUARY 1 MARCH 31, 2004

Transcription

1 INTERIM REPORT JANUARY 1 MARCH 31, 2004 U1

2 GROUP KEY DATA Jan. 1 Mar. 31, Jan. 1 Mar. 31, Change e million e million in % Sales Profit EBITA 1) EBITA margin in % DVFA/SG income Net income Cash flow from operating activities Capital expenditure Balance sheet total 2) Share in c DVFA/SG earnings per share 3) Closing price 4) Number of employees Average ) Before extraordinary items 2) As of March 31, 2004 and December 31, ) Calculation basis: 30.6 million shares in Q1/2004 (excluding own shares) 34.0 million share in Q1/2003 4) As of March 31, 2004 and March 31, 2003 EBITA/EBITA margin in c million Net income in c million % % Q Q Q Q EBITA EBITA margin 1

3 INTERIM REPORT Axel Springer Konzern In the first quarter of 2004, Axel Springer improved EBITA from c 58.4 million to c 66.5 million, despite the ongoing weak economic and market situation. Net income increased from c 19.1 million to c 25.0 million. This profit upturn was achieved by increasing sales from c million to c million with ongoing cost discipline. Both retail and advertising revenues were up year-on-year. Assuming a recovery of the advertising markets, the Management Board expects that there will be a slight sales increase in the financial year 2004 against Nevertheless, the company would accept EBITA 2004 being below that of the previous year due to the launch of new newspapers and magazines. ECONOMIC ENVIRONMENT There was no resounding revival of the economy in the first quarter. Adjusted for the number of calendar days, general economic growth was up 0.5% on the equivalent period of the previous year. While incoming orders from abroad were still negatively impacted by the appreciation of the euro, recent incoming order statistics indicate stimulus from the domestic economy. The tax reductions at the beginning of 2004 only gave a temporary lift to private consumption. The inflation rate increased slightly to 1.1% in March. Advertising market stabilizes According to Nielsen Media Research, gross advertising sales of classical media (excluding classified ads) posted considerable growth over the figures of same quarter of the previous year with a rise of 7.0%. However, the net development was considerably more modest due to ongoing pressure on conditions. Gross advertising spending of brand manufacturers and services company as well as the large retail chains (including media advertising) totaled a 4.1 billion. Gross advertising expenditure increased primarily due to activities in the IT/communication area (+ 47.4%), the finance sector (+ 33.2%) as well as beverages (+ 19.6%), personal hygiene (+ 16.6%) and discount stores (+ 9.7%). In contrast, however, gross advertising expenditure was considerably reduced in the pharmaceutical ( 9.9%), home and gardening ( 12.0%), and car market ( 1.8%) areas, as well as in the energy ( 43.9%) and photography and optics ( 35.6%) sectors. In the print media (without classified ads), gross revenues from the advertising business increased by 8.2% to a 2.1 billion (gross) in the first three months. In contrast, classified ads in newspapers deteriorated slightly in the first three months. For newspaper advertisements (without classified ads), companies spent a gross figure of a 1.1 billion (+ 12.6%) in the reporting period. One reason for the positive development was the continuing strong advertising measures of discount stores. This development was overshadowed by the negative trend in the classified ads business, which continued to negatively impact newspaper revenues: There was a double-digit decline for employment ads in the first two months of the year. Advertising volumes for classified ads relating to cars, family and events also declined. 2

4 Gross advertising revenues for general interest magazines increased by 4.2% to a 881 million, however these increases do not reflect significantly poorer development of net revenues. Gross advertising revenues for electronic media increased by 6.0%. While television advertising revenues increased by 6.8% to a 1.7 billion, radio advertising revenues were almost unchanged on the figure of the previous year, increasing by 0.5% to a 220 million. Poster advertising expanded its revenues by 2.6% to a 121 million. Retail press markets continue to decline Restrained demand also was evident in the retail press markets. Net paid circulation for newspapers and magazines declined by 4%. Across the industry, press sales were down 1% yearon-year. Price increases were successfully implemented, particularly for newspapers. In the mass segments of the magazine market with its fierce price competition, the scope for pricing policy remained extraordinarily limited. In spite of the overall weak market situation, variety in the magazine area increased further, including special issues. With an unchanged number of daily and Sunday newspapers registered with the circulation organization IVW of 381, total sales declined by 2.4% to 26.3 million copies. At 4.9%, circulation was down more strongly for newsstand sales than the 1.7% decline in subscriptions. The number of general-interest magazines registered with IVW increased by 8 to 811. At million copies per issue, total sales were stable (+ 0.1%). The 2.0% downturn in newsstand sales was offset by gains of 1.8%, partly due to new membership magazines. BUSINESS DEVELOPMENT In the first quarter of 2004, Axel Springer increased EBITA from a 58.4 million to a 66.5 million and net income from a 19.1 million to a 25.0 million despite the weak general economic situation. The company generated a year-on-year increase for both retail revenues and advertising revenues. Ongoing cost management also contributed to the improved profits. As at the beginning of 2004, Axel Springer continued the expansion process. In Germany, the company launched the biweekly TV guide TV DIGITAL in March. Outside Germany, two new licensed editions were published, AUTO- BILD EESTI in Estonia and AUTOBILD SUOMI in Finland. Axel Springer Russia prepared to launch the Russian licensed publication of the American business magazine FORBES. The construction of the new office and business premises in Berlin was concluded as scheduled. Axel Springer opened the new building with the Ullstein-Halle and the Axel-Springer- Passage on January 13. Bundling central group management and service functions at the main office in Berlin was continued with the objective of achieving further improvements in efficiency. 3

5 Newspapers The outstanding importance of BILD as an advertising vehicle was confirmed by considerable sales increases in the national advertising business. The retail trade uses the sales strength of the newspaper in the current competition for market share. With a circulation of approximately 3.8 million, BILD as pure-play newsstand newspaper did not remain unaffected by the palpable consumer restraint in the press market. With a circulation of over 2 million, BILD am SONNTAG remained unchallenged market leader for Sunday newspapers. Despite predominantly negative trends in the general market, the positive year-on-year development in the advertising area continued. The turnaround achieved in the advertising market in 2003 also continued. On the difficult Berlin retail market, BERLINER MOR- GENPOST slightly improved its position of the previous year, with over copies. At roughly copies, B.Z. posted circulation figures just under those of the previous year, but gained ground in comparison to regional tabloids. Both newspapers were negatively impacted by the ongoing difficult situation in the classified ads business. With an almost unchanged circulation of on Saturday, HAMBURGER ABENDBLATT underscores its importance as a classified ads market place for readers. At SPORT BILD, an editorial realignment and a marketing campaign in combination with increasing circulation to copies led to a considerable growth in advertising. DIE WELT also exceeded advertising revenues on a yearon-year basis. With WELT am SONNTAG, the good reach figures of the last decision-making reader analysis (+ 8% year-on-year) boosted advertising revenues against the comparative period of the previous year. With circulation of approximately , WELT am SONNTAG confirmed its position as the largest German quality Sunday newspaper. Newspapers in Germany Net paid circulation, IVW, average Q1/2004 BILD BILD am SONNTAG SPORT BILD DIE WELT WELT am SONNTAG HAMBURGER ABENDBLATT BERLINER MORGENPOST B.Z B.Z. am SONNTAG

6 Magazines in Germany Net paid circulation, IVW, average Q1/2004 HÖRZU FUNK UHR TV NEU BILDWOCHE BILD der FRAU FRAU von HEUTE JOURNAL für die FRAU JOLIE ALLEGRA COMPUTER BILD COMPUTER BILD SPIELE AUDIO VIDEO FOTO BILD AUTO BILD AUTOMOBIL TEST AUTO BILD ALLES ALLRAD AUTO BILD MOTORSPORT AUTO BILD TEST & TUNING EURO am SONNTAG FINANZEN MAXIM FAMILIE&CO SPIELEN und LERNEN POPCORN YAM! MÄDCHEN STARFLASH MUSIKEXPRESS ROLLING STONE METAL HAMMER Magazines In the first quarter, Axel Springer successfully continued its expansion process in and outside of Germany. The launch of TV DIGITAL in Germany marked the successful entry into the market for fortnightly TV guides. TV DIGITAL is the first TV guide specially developed for digital television. With its 2 in 1 Concept, TV DIGITAL not only provides information on the 37 free channels, but also on the roughly 30 Premiere channels, as well as other digital television offerings. Premiere Fernsehen GmbH & Co. KG is the strategic partner of TV DIGITAL. The COMPUTER BILD Group further consolidated its market leadership. COMPUTER BILD increased its circulation year-on-year by 3.1% to approximately copies. This makes COMPUTER BILD by far the largest computer magazine in Europe. With net paid circulation of over , AUDIO VIDEO FOTO BILD became the European market leader the first time it was included in the IVW report on circulation. For the press retail business, AUDIO VIDEO FOTO BILD has been the largest monthly producer of sales since its launch. Since February, AUTO BILD Europe s largest newsstand car magazine has appeared with an extended editorial section and a revised appearance. Also new is the eight-page AUTO BILD Wochenschau. Net paid circulation developed in a positive fashion and, at over copies, is ahead on the equivalent period of last year. The weekly woman s magazine, FRAU von HEUTE, launched in April 2003, posted a further improvement in net paid circulation to despite a price increase per copy. 5

7 International activities The Polish daily FAKT launched in October 2003 was crowned Medium of the Year 2003 by the Polish media service Impact and New Launch of the Year by the media consulting company Eskadra. In the first quarter, FAKT increased its circulation to over copies, thus improving its position as the largest Polish daily. FAKT now has 3.5 million readers. In France competition has intensified on the market for TV guides, in which Axel Springer is represented by TÉLÉ MAGAZINE. The first fortnightly TV guide appeared in January. No statement can currently be made as to the long-term impact of the initial success of the fortnightly magazines on the established TV guide TÉLÉ MAGAZINE. Since March, there have been two new licensed editions for AUTO BILD, AUTO BILD EESTI in Estonia and AUTO BILD SUOMI in Finland. With a total of 19 editions, AUTO BILD is the German magazine brand with the most international editions. In the first quarter, Axel Springer Russia prepared the launch of its first magazine, the Russian edition of the American business magazine FORBES was launched on April 15, and its progress has been highly encouraging. The license was granted by Forbes Inc. Electronic media In March, BILD.T-ONLINE.DE achieved 307 million page impressions, further extending its market leadership. Media- Markt was gained as a new cooperation partner for the popular product promotions of BILD.T-ONLINE. DE. With Media- Markt, the successful popular promotions of were implemented, for notebooks and for LCD televisions. Furthermore, BILD.T-ONLINE.DE introduced Lucky Tuesday, the prize game already established in BILD. In the first quarter, AUTOBILD.DE posted the highest number of hits since its launch in From the start of the year, AUTOBILD.DE upped the range from 10 to 30 million page impressions. In the last quarter, IMMONET.DE further consolidated its position as one of the leading real estate portal providers in Germany. Two exclusive cooperation agreements were concluded to extend the network at a regional level: In Mecklenburg-Western Pommerania with MVWeb, in Saxony, Saxony- Anhalt and Thuringia with Wohnfinder, the leading regional real estate portal in Eastern Germany. Schwartzkopff TV Productions GmbH, a 100% equity holding of Axel Springer AG, has been successfully producing the folk must format Lustige Musikanten as prime time program for the ZDF since the beginning of the year. Printing and Logistics The modernization of the offset printing facility in Ahrensburg was continued on schedule in the context of the extensive reinvestment program. Despite the ongoing weak general economic situation, the contract printing volume for gravure printing was increased against the previous year. Since January 2004, Der Tagesspiegel is produced in the Spandau printing house. The focus in the logistics and retail area was on preparations for opening up new distribution channels. The target is to acquire not only discount stores, but also further retail segments. 6

8 FINANCIAL SITUATION Sales Despite a continued difficult market situation, Axel Springer generated a sales increase from a million to a million in the first quarter of This was due to the impact of the price increases made and the positive development of the international publications, some of them established in Advertisement sales rose slightly by a 4.4 million (+ 1.9%) to a million. Retail revenues posted an increase of a 14.4 million (+ 5.2%) to a million. Miscellaneous sales rose by a 4.5 million (+ 5.8%) to total a 80.4 million. Sales generated outside of Germany increased by a 7.6 million (+ 10.1%) to a 83.6 million. Axel Springer now posts 13.7% of sales abroad (previous year: 12.9%). Newspaper sales were a 20.4 million higher (+ 6.2%) to a million. Advertising revenues increased by a 7.5 million (+ 4.5%) to a million. Important factors here were the positive development of BILD and BILD am SONNTAG as well as DIE WELT and WELT am SONNTAG. Retail revenues of newspapers were a million, a 12.9 million (+ 8.1%) higher than in the previous year. This is chiefly due to the positive development of BILD and HAMBURGER ABENDBLATT. Sales by sectors Jan. 1 Mar. 31, Jan. 1 Mar. 31, Change e million e million in % Distribution Advertisement Miscellaneous Total Sales by segments Jan. 1 Mar. 31, Jan. 1 Mar. 31, Change e million e million in % Newspapers Magazines Printing Electronic Media Other revenues Total

9 Magazine sales deteriorated slightly by a 1.6 million ( 0.9%) to a million. At a 61.1 million, advertisement sales were down by a 3.1 million ( 4.8%) year-on-year. The positive advertising revenues trend in the area of car and computer magazines as well as SPORT BILD was able to offset the slide in advertising business at the women s magazines and TV guides. At a million, retail revenues were up a 1.5 million (+ 1.3%) on the equivalent figure of the previous year. The main reason for this is the success of the computer magazines and the new magazines AUDIO VIDEO FOTO BILD and TV DIGITAL. Sales in Electronic Media were a 3.2 million higher (+ 23.2%) at a 17.0 million. Sales in the Printing segment posted a slight rise to a 30.7 million (+ 9.3% year-on-year). Other revenues totaled a 32.7 million, down a 1.3 million ( 3.8%) on the first quarter of Profit In the first quarter 2004, Axel Springer improved EBITA from a 58.4 million to a 66.5 million. This excludes extraordinary items from streamlining the portfolio of a 5.1 million (previous year: a 13.0 million). Net income increased from a 19.1 million to a 25.0 million. DVFA/SG income increased from a 21.7 million to a 29.2 million. The higher sales generated and ongoing cost management achieved this rise in profits. This was countered to some extent by the start-up costs of the expansion process, which negatively impacted particularly the EBITA of the magazine division. Total expenses (before taxes and goodwill amortization) rose disproportionately compared to sales, by a 12.3 million (+ 2.2%) to a million. Capital expenditure In the first quarter of 2004, Axel Springer invested a 28.6 million (previous year: a 40 million). With a 27.0 million capital expenditure related primarily to tangible assets (previous year: a 36.7 million). The focus of investment activities was the extension of the offset printing facility in Ahrensburg and the construction of the Berlin office and business premises. Investments in intangible assets were a 1.0 million (previous year: a 3.0 million), investments in financial assets a 0.6 million (previous year a 0.3 million). Depreciation and amortization (without goodwill amortization) totaled a 19.3 million (previous year: a 19.6 million). Net liquidity The total of the cash flows from operating, investment and financing activities of a 12.1 million were transferred to the funds. As of March 31, 2004, this totaled a million. With loan liabilities of a million, Axel Springer closed the quarter with net liquidity of a million. As of December 31, 2003, net liquidity was a 99.4 million. EMPLOYEES In the first quarter of 2004, Axel Springer employed an average number of people (without trainees and interns), 319 fewer than in the equivalent period of the previous year. As of April 1, 2004, the number of employees was (previous year: ). 8

10 SHARE The price of the Axel Springer share at the beginning of the year was a 70. During the course of the quarter, the share outperformed the MDAX and closed at a (previous year: a 42.50) on March 31, The DVFA/SG earnings per share were a 0.95 after a 0.64 in the previous year. Share performance Index January 2, 2004 = 100 OUTLOOK It is expected that the global economic upturn in 2004 will gradually spread to the Germany economy. Provided that the euro does not experience a further appreciation, exports will expand much more quickly than in the last two years. In view of favorable financing conditions and low wage increase, the general situation for investors is positive. Corporate sales expectations have improved in recent months. For the whole of 2004, the current forecast is for 1.5% growth of the gross domestic product. A sustained improvement in the advertising market is not yet certain. Industry experts ascribe the growth in the first quarter as being largely due to the weak previous year. Gross advertising expenditure of the traditional media in Germany is expected to increase by 2% to 3% for the year as a whole. January 04 March Assuming a recovery of the advertising markets, the Management Board expects that sales for the whole of 2004 may well be slightly higher than in Nevertheless, the company would accept EBITA 2004 being below that of the previous year due to the launch of new newspapers and magazines Axel Springer AG MDAX 9

11 INTERIM FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS Assets Mar. 31, 2004 Dec. 31, 2003 e 000 e 000 A. Fixed assets I. Intangible assets II. Tangible assets III. Financial assets B. Current assets I. Inventories II. Accounts receivable and other assets III. Securities 1) IV. Cash and cash equivalents C. Prepaid expenses Stockholders equity and liabilities Mar. 31, 2004 Dec. 31, 2003 e e 000 A. Stockholders equity I. Subscribed capital II. Revenue reserves III. Consolidated retained earnings IV. Consolidated net income V. Minority interests B. Provisions C. Liabilities D. Deferred income ) Including own shares of c million 10

12 CONSOLIDATED INCOME STATEMENTS Jan. 1 Mar. 31, Jan. 1 Mar. 31, e 000 e Sales Change in inventories of finished goods and work in progress Other operating income Cost of materials Gross profit Personnel costs Depreciation/amortization of intangible and tangible assets Other operating expenses Income from equity holdings Net interest balance Income from operations Taxes Consolidated net income of which minorities EBITA reconciliation Income from operations Net interest balance Goodwill amortization EBITA including extraordinary items Extraordinary items Adjusted EBITA

13 CONSOLIDATED STATEMENTS OF CASH FLOW Jan. 1 Mar. 31, Jan. 1 Mar. 31, e 000 e 000 Consolidated net income Depreciation/appreciation of fixed assets Changes in provisions Changes in inventories, receivables and other assets Change of other borrowed funds Cash flow from operating activities Outflow for investments in fixed assets Inflow from the sale of consolidated companies Cash flow from investment activities Change in financial liabilities Dividends paid Other changes Cash flow from financing activities Total cash flow Funds on Funds on / Changes in funds due to differences in the companies consolidated 66 Changes in funds with cash effects In the statements of cash flow the payment flows are divided into the areas of operating, investment and financing activities. As company liquidity, other securities in current assets and cash and cash equivalents are included in funds. 12

14 GROUP SEGMENT REPORT Jan. 1 Mar. 31, 2004 Newspapers Magazines Printing Electronic Other/ Total media consoliin e million dation External sales Internal sales Division sales Sales in Germany Sales outside Germany Division sales EBITA of which depreciation of which income from equity holdings Employees Jan. 1 Mar. 31, 2003 Newspapers Magazines Printing Electronic Other/ Total media consoliin e million dation External sales Internal sales Division sales Sales in Germany Sales outside Germany Division sales EBITA of which depreciation of which income from equity holdings Employees For division sales the internationally recognized key ration EBITA (Earnings before Interest, Taxes and Amortization) is used to show the period result before interest, taxes and goodwill amortization. 13

15 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY Parent company Minority interests Accumulated other Subscribed Generated comprehensive capital Group equity income Ordinary Adjustment Adjustment from shares item from initial application Adjustment currency of the German item for translation Transparency and Stockholders Minority currency Group in e 000 Disclosure Act Equity capital translation Equity equity Dec. 31, Dividens paid Miscellaneous changes Net income for the quarter March 31,

16 EXPLANATORY NOTES TO THE INTERIM FINANCIAL STATEMENTS Axel Springer Group General notes The interim report on the period between January and March, 2004 was prepared in line with the German Accounting Standard No. 6 (DRS 6) Interim Reporting of the German Accounting Standards Committee e. V. (DRSC). The accounting and valuation methods used for the interim financial statements as of March 31, 2004 correspond to those used in the consolidated financial statements as of December 31, Consolidated companies In the consolidated financial statements as of March 31, 2004, 31 German and 18 foreign companies were included in consolidation, in addition to Axel Springer AG. Four joint ventures were consolidated on a pro rata basis. Following the transfer of its business operations to Axel Springer AG, GMZ Druckerei GmbH & Co. was deconsolidated with effect of January 1, Berlin, May 2004 Axel Springer AG The Management Board Report of the Supervisory Board Audit Committee The interim report for the first quarter of the 2004 financial year and report of the auditor on the audit examination of the interim financial statements were submitted to the Supervisory Board Audit Committee. The documents were explained by the Management Board and discussed with the auditor. The Audit Committee approved the interim financial statements. Berlin, May 2004 Chairman of the Audit Committee Dr. Giuseppe Vita Disclaimer This Interim Report contains forward-looking statements with the connected risks and imponderables. The actual development of business and profits at Axel Springer AG and the Group may deviate materially in the future from the assumptions made in this Interim Report. This Interim Report represents neither an offer for sale nor the request to submit an offer for the securities of Axel Springer AG. The publication of this Interim Report does not bring with it an obligation to update the statements made in it. 15

17 Financial calendar Annual Results Press Conference February 26, 2004 Annual shareholders meeting April 14, 2004 Interim Report January-March 2004 May 12, 2004 Interim Report January-June 2004 August 2004 Interim Report January-September 2004 November 2004 Share information Jan. 1 Mar. 31, Jan. 1 Mar. 31, DVFA/SG earnings per share 1) Closing price 2) Highest price Lowest price Average price Security identification number ISIN Reuters Bloomberg DE SPRGn.F SPR GR The Interim Report and current information on Axel Springer AG are available on the Internet: For more information please contact: Axel Springer AG Investor Relations ir@axelspringer.de Axel-Springer-Strasse Berlin Telephone: + 49 (0) / Fax: + 49 (0) ) Calculation basis: 34.0 million share in Q1/2003, 30.6 million shares in Q1/2004 (excluding own shares) 2) As of March 31, 2003 and March 31, 2004 Axel-Springer-Platz Hamburg Telephone: + 49 (0) / Fax: + 49 (0)