Axel Springer Drops After Operating Profit Seen Declining

(Bloomberg) -- Axel Springer SE shares fell the most in a year after the German publisher said it expects operating profit to decline in 2019.

  • Adjusted Ebit is expected to decline "in the low single-digit percentage range," the company said Thursday, citing higher depreciation and amortization. Revenue is expected to rise in the low single-digit percentage area.

Key Insights

  • The slowdown in earnings comes after several quarters of profitable growth; adjusted earnings per share, for example, is to remain about flat or decline slightly this year -- compared with growth of 5.1 percent in 2018.
  • While Axel Springer’s total sales are expected to rise, growth is expected to slow at the classifieds business, its main driver.
  • Axel Springer said it will continue to invest in digital news products such as Insider and classifieds sites including job portal Stepstone; digital businesses generated 71 percent of sales last year.
  • The company says both its Upday and Politico digital news products are on track to become profitable this year.

Market Reaction

  • Axel Springer declined as much as 7.1 percent, to 46.5 euros a share, the steepest intraday drop in a year. The stock was down 6.9 percent as of 9:15 a.m. in Frankfurt.
  • Analysts at Morgan Stanley called the revenue outlook “tepid” in a note.
  • See the numbers here.

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