How To Grow And Expand Axel Springer

Transcription

1 German Investment Seminar 2011 January 10-12, 2011 Claudia Thomé, Head of IR

2 Disclaimer This document, which has been issued by Axel Springer Aktiengesellschaft (the "Company"), comprises the written materials/slides for a presentation of the management. Whilst all reasonable care has been taken to ensure that the information and facts stated herein are accurate and that the opinions and expectations contained herein are fair and reasonable no representation or warranty, express or implied, is given by or on behalf of the Company, any of its directors, or any other person as to the accuracy or completeness of the information or opinions contained in this document and no liability is accepted for any such information or opinions. This document contains forward looking statements which involves risks and uncertainties. These forward looking statements speak only as of the date of this document and are based on numerous assumptions which may or may not prove to be correct. The actual performance and results of the business of the Company could differ materially from the performance and results discussed in this document. The Company undertakes no obligation to publicly update or revise any forward looking statements or other information contained herein whether as a result of new information, future events or otherwise. This document does not constitute or form any part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision in relation thereto. 2

3 Axel Springer has started transforming its business over the past 6 years to create a leading European integrated multimedia company Axel Springer in 2004 Axel Springer in 9M/10 Our Vision Digital 2% Digital 24% 1) Europe s leading integrated multimedia company Print 98% Print 76% 50% digital 50% print Strong brands Digital activities represent 24% 1) of revenues and 14% of EBITDA in 9M/10 1) Pro forma for acquisitions 3

4 Our strategy focuses on our core competencies 1 Leadership in Germany Strengthen and expand leading market position Strong brands drive high media reach and advertising revenues Core Competencies 2 International expansion 3 Digital transformation Replicating the German model internationally JV with Ringier in CEE Existing brands extended online Business model enhanced in digital world 4

5 1 Germany represents a unique newspaper market Strong circulation revenues in Germany Higher proportion of total revenues than in other countries More resilient than in the UK and the US Potential for regular cover price increases Higher share of younger readers No free sheets Key themes in German market Strong position of BILD with 80% 1) market share Newspapers with higher share of advertising spend than TV as opposed to US 2) National newspaper circulation revenues (07-09 CAGR) 2.9% (reach in m) 12.5 BILD Wetten, dass? % -3.6% -3.1% 3) 4) Axel Springer Germany UK US BILD reach vs TV shows 5) 2.4 Dr. House 8.9 Le Figaro 3.7 American Idol - Tuesday 28.7 USA Today 4) 4) 7.8 The X Factor 11.8 The Sun 1) Including Berlin newsstand newspaper B.Z.; market share based on paid circulation of newsstand newspapers 2) Source: ZenithOptimedia October ) Source: company information; National Newspaper circulation sales as % of total National Newspaper sales 4) Source: PwC Global Entertainment and Media Outlook, , 2009E forecast 5) UK: Year average for The X Factor 2009, BARB (BroadcastersAudience Research Board); average reach of Sun between Oct.08 to Sept. 09 NRS (National Readership Survey), USA: USA TODAY Reader Brand Research 2009; MRI Fall 2009, Nielsen Television - TV Ratings for Primetime: Seasonto-Date ( Season Through Jan. 24, 2010), France: Daily newspapers: EPIQ-Studie 2008/2009, TV: Viewers 4J.+ Mediametrie 2009; Germany: Average for Wetten, dass? 2009, Viewers age 14+, GFK/TV Panel 2009, ma 2010 Pressemedien II 5 5

6 1 Axel Springer is Germany s leading print marketer and publisher Market share by circulation 1) Market share by adspend 3) 19% With 19% market share, Axel Springer reaches 52% of the German population 2) 17% 7% 7% 5% 4% 3% 3% 9% 7% 5% 4% 4% Axel Springer Bauer WAZ SWMH Burda Holtzbrinck G+J Axel Springer G+J Burda WAZ Bauer DuMont Newspapers Magazines Newspapers Magazines 1) Source: Company estimates based on IVW 9M/10, paid circulation; weighted market share taking into account different title frequencies 2) Source: ma 2010 Pressemedien II; combined reach among German-speaking 14+ year olds of all covered Axel Springer AG newspapers, magazines and 100% owned subsidiaries 3) Source: Nielsen Media Research; gross adspend, excl. classified ads, supplements and media advertising, 2010 Jan.-Sept, 100% owned subsidiaries and Jahr Top Special Verlag 6

7 Axel Springer is Germany s leading print publisher Core Axel Springer brands Axel Springer market share 1) Newsstand papers No. 1 81% National Sunday newspapers No. 1 85% National quality papers No. 3 17% Regional subscription papers 2) No. 1 93% No. 1 34% Magazines No. 3 13% 1) Based on paid circulation IVW 9M ) Figures based on regional markets accordingly (Hamburg: no regional newspapers besides AS titles, Berlin: N 2-Berliner Zeitung, N 3-Tagesspiegel) 7 7

8 Axel Springer: A strong platform for international expansion Ringier Axel Springer Media Individual countries Digital Hungary Czech Republic Poland Switzerland Spain France Slovakia Serbia Combining reach of No. 1 tabloid positions in all five JV countries 1) Goal: Further growth and digitization in CEE Russia India Country-by-country approach Strong media portfolios and market positions in each country International roll-out of successful digital business models (partly without physical presence) Making use of network effects and economies of scale 1) Approval from the Hungarian merger control authority in Q1/11 expected 8

9 Successful start of Ringier Axel Springer Media joint venture in CEE No. 1 tabloid: Blesk (Ringier) Reach: 1.5m No. 1 tabloid: Nový Čas (Ringier) Reach: 1.2m No. 1 tabloid: Blic (Ringier) Reach: 0.8m Czech Republic Axel Springer Presence Ringier Presence Poland Slovakia Hungary Serbia No. 1 tabloid: FAKT (Axel Springer) Reach: 4.7m No. 1 tabloid: Blikk (Ringier) Reach: 1.1m 5 market leading mass market brands with strong digitiziation potential >100 print titles and > 70 online offerings 50% economic ownership with 100% consolidation for Axel Springer Consolidation of all JV countries except Hungary since July 2010 Common goal: Growth and digitization 9

10 3 We have become the largest digital player by revenue among European print publishers Digital media revenues (in m) 569 FY09 revenues ( m) % of total revenues Axel Schibsted Sanoma Lagardere DMGT Trinity Telegraaf L'Espresso Johnston Springer 1) Mirror Press FY09 21% 29% 12% 2% 5% 5% 6% 3% 4% 9M/10 24% 27% 2) 12% N/A 6% 3) 7% 4% 5) 5% 5) 5% 4) 1) Based on pro forma revenues for Digital Media 2) Online revenues include revenues from online classifieds, the online portion of Media Houses Scandinavia revenues and the online portion of Aftonbladet revenues. Exclude any online revenues from Media Houses International division 3) Based on FY10 financials ending October 3, ) Based on interim results, 26 weeks to July 4, ) Based on H results, ending June 30,

11 Digital strategy along core competencies Core Competencies A Content portals Audience B Classifieds / Marketplaces Advertisers C Performance marketing Cross-synergies between core competencies increase revenues and profitability 11

12 A BILD example of our successful transition to digital channels News 1) Site visits (in m) 150m 100m 50m Jan 08 Sep 08 Mai 09 Jan 10 Sep 10 2) 2) 2) Sport Automotive Computer Site visits (in m) Site visits (in m) Site visits (in m) ) /sport Kicker Online Sport1.de Auto Motor und Sport Auto News Chip.de Pcwelt.de 1) Source: IVW, Sep ) Source: IVW, Jan Sep 2010 (monthly average) 3) Axel Springer s sport sites include: sportbild.de, Bild.de/Sport and Transfermarkt; Source: IVW (sportbild.de and Transfermarkt), Webtrekk (Bild.de/Sport) 12

13 A aufeminin strengthening market leadership Leading market positions* International revenue contribution (in m) Belgium: #1 aufeminin 0.6 Femistyle 0.2 France: #1 aufeminin 7.3 LeJournal de 6.1 Femmes sofeminine ivillage UK: # gofeminin Brigitte 1.8 Germany: #1 EBIT Margin 38% % +92.7% -9.8% 27% 35% % +47.7% +33.6% Spain: #1 enfemenino 3.1 Terra Mujer 1.0 alfemminile Donna Moderna Italy: # Unique visitors in million Sources: FR: Médiametrie // NetRatings Oct DE: AGOF internet facts 2010-II IT: Nielsen Oct ES: Nielsen NetView Oct BE: cim.be August 2010 UK: comscore Oct M/08 9M/09 9M/10 France International * Additional presence in Canada, Morocco, Poland, Switzerland, Vietnam 13

14 A Paradigm shift Monetization of digital content works Regional portals Mobile portals iphone apps ipad apps Selected content available via paid subscriptions Free for print subscribers #1 mobile portal Free for BILD mobile customers More than transactions, more than downloads across all offers 1) WELT app and premium Iconist app launched WELT app best-selling publisher app in Germany BILD app best-selling news app after launch in December ) Accumulated December 2009 to December

15 B Utilizing marketing power to drive brand awareness for StepStone Key facts Leading position in online job classifieds No. 1 jobsite in Germany 1) Online jobsites in 11 countries Acquisition steps: 100% in several steps for approx. 130m Portfolio optimization: sale of software business for 110m Net purchase price of approx. 20m Expansion potential Cooperation with national newspapers Further international potential (eg Ringier JV) Strong growth expected in the job market 1) Based on reach; Source: Comscore 15

16 C Online Performance Marketing Axel Springer shapes European market leader Highlights Acquisition of continental European market leader zanox in /10: Expanding market leadership to the UK by add-on acquisitions of digital window and buy.at Resilient business maintaining organic growth during the crisis Peers outperformed achieving market share gains Acquired 08/ /

17 Investment criteria Strategic fit Proven and profitable business models Great management Reasonable valuation Added value through Axel Springer network 17

18 We have a strong track record of acquiring digital assets and fostering their growth Investments ( m): (07A-09A) PF EV/EBITDA multiple: 12x Content portals Classifieds/ marketplaces Performance marketing Total Key assets acquired Revenues CAGR: (07-09A) EBITDA CAGR: (07-09A) 31% 5% 16% 15% 15% 3% 22% 13% 18

19 Financial performance

20 We have had a strong financial performance over the last few years Revenues Revenues ( m) ,452 2,437 2,402 2,634 2,729 2,612 1, % 2, ) 2) M/09 9M/10 Digital revenues Print revenues EBITDA EBITDA ( m) ) ,7% 17,3% 18,3% 18,2% 17,8% 12,8% 11,4% 6,7% 8,2% 2) 2) % 20% 15% 10% 5% 0% EBITDA margin EBITDA ( m) % 14.0 % 9M/09 9M/10 25% 20% 15% 10% 5% 0% EBITDA margin EBITDA EBITDA margin 1) Including restructuring items of 75m 2) According to HGB 20

21 EBITDA contribution: Upward trend from Print International and Digital Media EBITDA (in m) Newspapers National Magazines National Print International Digital Media 1) EBITDA -margin 27% 26% 23% 26% 13% 16% 12% 22% -2% 4% 1% 13% 2% 5% 8% 11% M/07 9M/08 9M/09 9M/10 9M/07 9M/08 9M/09 9M/10-6 9M/07 9M/08 9M/09 9M/10 9M/07 9M/08 9M/09 9M/10 1) Excluding income from investments Dogan and P7S1 21

22 Print margins close to record high, Print International and Digital Media continue to expand margins (in m) Newspapers National Magazines National Print International Digital Media 9M/10 9M/09 yoy 9M/10 9M/09 yoy 9M/10 9M/09 yoy 9M/10 9M/09 yoy Revenues % % % % Circulation % % % Advertising % % % % Other % % % % EBITDA % % >100% >100% EBITDA margin 26.3% 23.1% 22.2% 12.1% 13.0% 1.4% 11.1% 7.6% 22

23 Strong cash flow generation and high dividend payments Free cash flow (ltm 1), in m) Dividend payments (in m) Dividend payments ( /share) Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/ ) Last twelve months 23

24 Looking ahead

25 Outlook 2010 Group Revenues EBITDA Significant increase yoy Level of 2008 achievable Revenue categories Circulation Advertising Other < 2009 > 2009 > 2009 Segments Newspapers National Magazines National Print International Digital Media Services/ Holding Revenues < 2009 < 2009 > 2009 > 2009 < 2009 EBITDA > 2009 > 2009 > 2009 > 2009 < 2009 Mid-term EBITDA Margin targets 25% 20% 15% 20% - 25

26 Key investment highlights No. 1 publisher in Germany reaching 52% of the population Leading market positions and brands across Europe CEE JV creates the leading platform for growth in the region Attractive portfolio of leading online properties that scale internationally Proven digitization strategy: already 24% 1) of revenues digital Geared for cyclical advertising recovery Strong profitability, healthy balance sheet, and high dividend 1) Pro forma for acquisitions 26

27 Backup - Financials 9M/10

28 Axel Springer with EBITDA on all-time high in 9M/10 in m Revenues Circulation Advertising Other EBITDA Margin 9M/10 2, % yoy +10.0% -2.0% +21.4% +17.5% +45.9% +4.6pp Q3/ % yoy +12.6% +2.2% +27.3% +4.9% +21.9% +1.3pp Revenues up 10.0% yoy, adjusted for consolidation effects +2.3% Circulation revenues down 2.0% Advertising growth driven by digital media EBITDA on all-time high in 9M/10 and EBITDA margin up from 14.0% to 18.6% 28

29 Continued cost discipline across the group in m 9M/10 yoy Q3/10 Personnel Purchased goods and services Other operating % +5.2% +9.8% yoy +3.5% +13.3% +8.2% Total Costs 1, % % thereof restructuring costs % % Total costs up by 104.9m, ex consolidation effects down by 44.6m Major savings in production, paper, shipping, distribution and other costs Restructuring costs significantly below prior year Personnel costs up 4.2%, adjusted for consolidation and other effects below prior year 29

30 Newspapers National: EBITDA margin at 26.3% in m Revenues Circulation Advertising Other 9M/ yoy -1.9% -2.6% -1.3% +3.5% Q3/ yoy -3.5% -3.0% -5.0% +13.3% Circulation revenues slightly down in line with circulation trend Advertising revenues slightly down in 9M/10 EBITDA increase mainly due to lower restructuring and paper costs EBITDA Margin % +12.0% +3.3pp % -1.9% +0.4pp Strong EBITDA margin at 26.3% after 23.1% in 9M/09 30

31 Magazines National: EBITDA increased significantly in m Revenues Circulation Advertising Other EBITDA Margin 9M/ % yoy Q3/10 yoy Circulation revenues down by 10.7%, -8.3% -10.7% -5.8% +19.5% +67.7% +10.1pp % -9.6% -12.5% -8.1% +43.7% +38.0% +6.4pp adjusted for portfolio changes by 4.8% Advertising revenues down by 5.8% in 9M/10, adjusted for portfolio changes on prior year level (+0.1%) Strong performance of sports and car magazines Strong EBITDA improvement due to operating improvements, continued cost discipline and portfolio changes 31

32 Print International: Improved revenues and strong EBITDA increase in m Revenues Circulation Advertising Other EBITDA Margin 9M/ % yoy Q3/10 yoy Revenues growing by 19.4%, +19.4% +16.9% +18.7% +65.1% >100% +11.6pp yoy adjusted 1) -1.7% -1.7% -3.6% +15.7% % +49.2% +66.3% +74.2% >100% >100% >100% 16.5% +15.1pp yoy adjusted 1) -2.1% -1.4% -0.5% -21.4% adjusted for consolidation and FX effects slightly down (-1.7% yoy) EBITDA improved considerably, margin up from 1.4% to 13.0% in 9M/10 EBITDA increase due to the CEE JV inclusion, continued cost discipline and operating improvements 1) Adjusted for consolidation and foreign exchange effects 32

33 Digital Media: Strong growth, EBITDA more than doubled in m Revenues Advertising Other EBITDA Margin 9M/ % yoy Q3/10 yoy Revenue growth of 62.6% in 9M/ % +75.6% +30.3% >100% +3.5pp % +55.9% +82.5% -4.0% >100% +3.2pp Organic growth of 20.4% in 9M/10 and 24.4% in Q3/10 (based on pro forma revenues of 494.4m in 9M/10 versus 410.8m in 9M/09) Pro forma revenues Digital Media at 23.9% of pro forma total revenues (9M/09: 20.7%) EBITDA more than doubled, margin up from 7.6% to 11.1% 33

34 Adjusted net income increases in 9M/10 (in m) Non-operating items Gain on sale of investments (9M/ m; 9M/ m) Purchase price allocations (9M/ m; 9M/ m) Other non-operating effects (9M/ m; 9M/09 7.8m) Tax effect on non-operating items (9M/10 5.9m; 9M/ m) 9M/09 9M/10 9M/09 9M/10 Adjusted for significant nonoperating items 34

35 Free cash flow/net financial debt (in m) Free cash flow Net financial debt / liquidity 1) /31/ /30/10 9M/09 9M/ Credit line of 1.5bn secured until 2012, 1bn thereof extended until ) Excl. pension liabilities (12/31/09: - 359m; 09/30/10: - 388m) 35

36 Investor Relations contacts Claudia Thomé Head of Investor Relations Phone: +49 (0) Mobile: +49 (0) Daniel Fard-Yazdani Deputy Head of Investor Relations Phone: +49 (0) Mobile: +49 (0) Axel Springer AG Axel-Springer-Str Berlin / Germany Fax: +49 (0)