Axel Springer CEO says PIN mail buy was a mistake
Axel Springer AG said its strategy to enter the German mail and logistics business was a mistake and that it will stick to expanding its digital and international business.
“2007 was a bad year for Axel Springer AG,” Chief Executive Mathias Doepfner told shareholders at the company’s annual general meeting on Thursday.
“The investment into the mail and logistics business, acquiring the majority of the PIN Group, was wrong from today’s view.”
He added that the PIN endeavour, as well as a financial crisis in the capital markets in the second half of 2007 and general scepticism among investors towards media companies, had weighed on Axel Springer’s share price.
“At any rate, we cannot be satisfied with a closing share price of 98 euros on December 28, 2007, and the recent development of the Axel Springer share price,” Doepfner said.
The stock fell 28 percent in 2007 and 22 percent since the start of 2008. Shares were down 1.33 percent at 74 euros at 0924 GMT, while the DJ Stoxx European media index was down 0.63 percent.
It reported a loss of 288 million euros (USD 459.2 million) last year due to 572 million euros in writedowns from the now insolvent PIN Group, in which Springer has a 64 percent stake.
Hoping to take advantage of deregulation of the German postal market, the Berlin-based publisher had planned to set up a German mail service and challenge the country’s dominant player, Deutsche Post, but pulled out when the German government forced through a minimum wage for the industry, which was higher than PIN salaries.
Axel Springer AG said its strategy to enter the German mail and logistics business was a mistake and that it will stick to expanding its digital and international business.
“2007 was a bad year for Axel Springer AG,” Chief Executive Mathias Doepfner told shareholders at the company’s annual general meeting on Thursday.
“The investment into the mail and logistics business, acquiring the majority of the PIN Group, was wrong from today’s view.”
He added that the PIN endeavour, as well as a financial crisis in the capital markets in the second half of 2007 and general scepticism among investors towards media companies, had weighed on Axel Springer’s share price.
“At any rate, we cannot be satisfied with a closing share price of 98 euros on December 28, 2007, and the recent development of the Axel Springer share price,” Doepfner said.
The stock fell 28 percent in 2007 and 22 percent since the start of 2008. Shares were down 1.33 percent at 74 euros at 0924 GMT, while the DJ Stoxx European media index was down 0.63 percent.
It reported a loss of 288 million euros (USD 459.2 million) last year due to 572 million euros in writedowns from the now insolvent PIN Group, in which Springer has a 64 percent stake.
Hoping to take advantage of deregulation of the German postal market, the Berlin-based publisher had planned to set up a German mail service and challenge the country’s dominant player, Deutsche Post, but pulled out when the German government forced through a minimum wage for the industry, which was higher than PIN salaries.
Axel Springer, publisher of Germany’s best-selling tabloid Bild, has had little luck in moving beyond print in its home market.
In 2006, Axel Springer pulled out of its planned 2.5 billion euro acquisition of TV broadcaster ProSiebenSat.1 in the face of regulatory hurdles.
Doepfner told shareholders Axel Springer will from now on stick to its core business.
He reiterated the publisher aims to make 400 million euros in revenues from its online activities by 2010. In 2007 Axel Springer’s online business contributed 8.6 percent to total group revenues of 2.6 billion euros, excluding PIN group sales.
