* Q3 revenue 787.3 mln vs 804 mln average in Reuters poll
* Q3 EBITDA 150.6 mln vs 154 mln average in poll
* Keeps outlook for another record annual operating profit
* Shares 3 percent higher, at top of sector
By Harro Ten Wolde
FRANKFURT, Nov 7 (Reuters) - German publisher Axel Springer AG vowed its digital activities will more than compensate for a drop in advertising income in its print businesses, which pushed quarterly earnings below expectations.
Springer, which publishes Germany’s best-selling daily “Bild”, was one of the first German companies to make a move into digital media and away from traditional print products, outsmarting bigger peers such as privately held Bertelsmann .
The group’s digital media offerings - including web based versions of its newspaper titles as well as stakes in property and job sites - have so far this year contributed more than a third to Springer’s top line, with revenue from digital up 21.5 percent.
Such growth contrasts with signs of an advertising slowdown elsewhere.
Other media and advertising groups such as Publicis , WPP and Omnicom have cited economic headwinds as the main cause for declining advertising income at traditional print businesses.
Berlin-based Springer is not immune from such trends and the company said the euro crisis and the weakening global economy were placing a strain on the German economy, resulting in a significant drop in advertising income from the financial and pharmaceutical sectors in particular.
Its shares rose 3 percent by 1040 GMT as the company said earnings at its more profitable digital activities will more than offset the drop in print ad spending, adding it still expects 2012 revenue to rise by a single-digit percentage.
The shares were at the top of a 1 percent stronger media index, just ahead of Norwegian media group Schibsted which also cited weakening print advertising markets but still posted higher-than-expected earnings. [ID:nWEA6873
“Development in the digital segment has been slightly better than expected,” said DZ Bank analyst Harald Heider, keeping a “buy” rating on the shares. “Axel Springer is on the right track with respect to the migration towards (being) a digital powerhouse.”
Springer’s earnings before interest, tax, depreciation and amortisation (EBITDA) fell 4.4 percent to 150.6 million euros ($192.8 million) in the quarter through September, missing even the most pessimistic estimate of 152 million in a Reuters poll.
Revenue of 787.3 million was also below the most bearish expectations.
“Print advertising revenues in particular came in at the lower end of our expectations,” CEO Mathias Doepfner said.
The company sees EBITDA up slightly this year.
Doepfner confirmed some articles from its “Die Welt” daily would be placed behind a digital pay wall by the end of this year, as he told Reuters in an interview last month. “Bild” will also move to a pay model for some content.