UNTERFÖHRING (dpa-AFX) - Media group ProSiebenSat.1 is drastically cutting its dividend after a slump in profits last year. Instead of distributing profits to shareholders on a grand scale, CEO Bert Habets would rather invest money in the ongoing business and keep debt under control. The Board of Management therefore expects a further drop in profits from day-to-day operations in 2023. On May 1, the Group will have a new CFO after just over a year in the form of Martin Mildner, the former United Internet manager. The news was met with a slide in the share price on the stock market.

ProSiebenSat.1 stock fell almost 19 percent at times on Friday morning. Most recently, the stock was still down about 12.5 percent at EUR 8.55, but was still by far the biggest loser in the MDax, the index of mid-sized stocks. This virtually wiped out the gains made since the turn of the year.

Analysts had indeed expected the dividend to fall. But the actual extent of the cut was not on their minds. For example, management plans to pay out only 5 cents per share for the past year, after shareholders had received 80 cents a year earlier. Analysts had expected an average of 66 cents this time.

CEO Habets justified the reduction with a change in dividend policy. He said the Group was bringing shareholders' expectations "in line with appropriate balance sheet ratios and financial scope for necessary investments in our business. In the future, the company intends to distribute 25 to 50 percent of adjusted net income to shareholders. This means that the previously customary ratio will become the upper limit.

The Management Board also wants to make the amount of money shareholders receive in the future dependent on the Group's debt. For example, debt at the end of the year should generally remain 1.5 to 2.5 times adjusted operating earnings before interest, taxes, depreciation and amortization (adjusted Ebitda). But at the end of last year, the leverage ratio was already 2.4 times. And by the end of 2023, management expects it to rise to 2.5 to 3 times, provided the Group reaches around the midpoint of its earnings forecast in the current business.

Last year, ProSiebenSat.1 clearly felt the deterioration in consumer sentiment as a result of the Russian war of aggression in Ukraine and high inflation. Because many companies cut their advertising spending as a result, the media group's revenues fell by almost seven and a half percent year on year, to just under EUR 4.2 billion. Adjusted for special items, operating profit (Ebitda) slumped by almost a fifth to 678 million euros. Adjusted net income, which is decisive for the dividend, fell by more than 17 percent to 301 million euros. As a result of further charges, net income actually attributable to shareholders slumped from 456 million euros in the previous year to just 5 million euros.

And the outlook remains bleak for the time being. According to management estimates, consumers in Germany, Austria and Switzerland (DACH region) are likely to remain tight-fisted in 2023 due to high inflation, particularly in the first half of the year. The difficult economic situation is therefore also likely to put pressure on advertising revenues. For the second half of the year, the Executive Board expects a recovery.

For the full year, the Group's top management expects revenues of EUR 3.95 to 4.25 billion. Compared to 2022, both an increase and a decrease are thus conceivable. According to the forecast, adjusted earnings before interest, taxes, depreciation and amortization are likely to fall further in any case - to between 550 and 650 million euros.

Martin Mildner will monitor and manage the Group's finances in the future. The 53-year-old will take over from Ralf Peter Gierig on May 1. Mildner was most recently Chief Financial Officer of United Internet (1&1, GMX, Web.de) and left the company from Montabaur in Rhineland-Palatinate at the end of March at his own request. According to a statement from the Group, Gierig, who was previously ProSiebenSat.1's chief financial officer, has resigned from his post "by mutual agreement with the Supervisory Board." Supervisory Board Chairman Andreas Wiele and CEO Habets thanked the 57-year-old Gierig for his commitment to ProSiebenSat.1. over more than 20 years. Gierig had only taken over the Executive Board post at the beginning of last year./stw/he/tav/jha/