Morning Equity Briefing
Media
Axel Springer expects advertising markets to return to growth in 2010
Simon McGrotty
Axel Springer has reported FY2009 results which show revenue declines of 4.3% and EBITDA down 31% year-on-year. However, the group has benefited from its strong market share which has helped offset the slowdown in advertising markets.
Revenues suffered greatly from the recession in most of the group’s main markets. Advertising spend declined heavily, and consumer spending in the circulation markets slowed. Axel Springer benefited from its strong position in the circulation market with circulation revenues remaining relatively robust, falling by 3.3%. The national newspapers segment saw circulation revenues rise by 1%, while advertising revenues declined 12% year-on-year. In its international division, the group reported particular weakness in Eastern European markets.
In terms of outlook, management forecasts stable or slightly increasing revenues, resulting largely from growth in its digital segment, and it aims to increase group EBITDA by c.10%. It expects competition to increase in advertising markets generally, due to the rising use of digital media and the growing availability of free advertising. It is expected that average circulation of newspapers and magazines is likely to continue to fall with price increases unlikely.
The global advertising market is expected to stabilise in 2010. ZenithOptimedia forecasts a 0.9% increase, assuming that the economy continues to improve. Markets in North America, Western Europe and Japan, which were hard hit by the economic crisis, will recover more slowly and even contract again in 2010.