Schibsted has in Q4 2008 been affected by the financial crisis through weak development in the market for several of the operations in the Group. Primarily, advertising revenues are affected, particularly classified print.
The Norwegian market for classified advertisement has been weak in Q4 2008. Aftenposten print has experienced a significant decline in revenues, particularly as a consequence of the falling market for recruitment and real estate advertisements. In total, Aftenposten’s advertising revenues declined with 19% in Q4, compared with the same period in 2007. Bergens Tidende and Stavanger Aftenblad experienced a similar development. Also, Finn is affected by the weakening in the economic situation. In Q4, Finn’s revenues were unchanged compared with the same period in 2007.
This far in January, the challenging market conditions in the classified market have continued. Aftenposten, Bergens Tidende and Stavanger Aftenblad have experienced significant decreases in advertising revenues.
The market for classified advertisements is weak also in Sweden, and the advertising revenues of Svenska Dagbladet decreased with 7 % in Q4 2008 compared with Q4 2007. whichz Aftonbladet print experienced a weaker circulation development in Q4 2008 compared with the situation earlier in 2008. The volume on weekdays in 2008 as a whole decreased with 5.2% compared with the level in 2007. Advertising revenues declined moderately.
20 Minutes Spain is significantly affected by the economic situation in the market. The operation experienced a decline in revenues of 31% in Q4 2008, compared with the same period in 2007. The development for Schibsted’s online classifieds operations in Spain is mixed. Unemployment has increased substantially, and the weaker labour market resulted in reduced revenues for Infojobs.net. Invoicing at InfoJobs.net fell by 34% in Q4 compared with the same period in 2007. All in all Schibsted Classified Media’s Spanish and Latin American operations increased their online revenues by 2% in Q4 2008 compared to Q4 2007.
In connection with the year end reporting for 2008, Schibsted has conducted impairment tests of intangible assets and goodwill on the balance sheet. Impairment loss is recognised due to the financial turmoil and deteriorated market conditions. This particularly goes for Spain, where market participants expect weak economic development in 2009 and 2010. An impairment loss of approx NOK 1.6 billion will be charged in Q4 2008. This will not affect reported EBITA or Schibsted’s loan agreements. Approx NOK 1.3 billion is linked to the Spanish classified operations. In addition, impairment losses of approx NOK 100 million are being charged in connection with associated companies, and a further approx NOK 35 million are being charged in connection with financial investments. The impairment charges will lead to a decline in Schibsted’s equity ratio to approx 25%, based on the balance sheet as of Q3 2008. Schibsted’s debt covenants are not linked to the Group’s equity.
ONE OFFS IN Q4 2008
In Q4 2008 Schibsted booked restructuring charges of around NOK 200 million. This is in line with the estimate communicated at the Q3 2008 presentation. Of these, NOK 115 million are linked to stage 1 of the profitability programme, communicated in November 2008, while the rest mainly is linked to the close-down of the print classifieds operations in Spain. Stavanger Aftenblad and Bergens Tidende each made restructuring charges of approx NOK 50 million. Schibsted’s share of these charges will affect the reported contribution from associated companies, and thereby affect reported EBITA negatively.
PROFITABILITY PROGRAMME STAGE 2
It is necessary for Schibsted to secure manoeuvrability financially and strategically during a challenging period in the markets. When the Group released its Q3 2008 report 7 November 2008, profitability measures of NOK 500 million for 2009 were communicated. Measures totalling an additional NOK 250 million have now been identified. Overall profitability measures, effective for 2009 are thus NOK 750 million. The Group will continue working on further profitability measures.
INCREASED FINANCIAL FLEXIBILITY
Schibsted has had limited ability to report net interest bearing debt compared to EBITDA (NIBD/EBITDA ratio) above 3.0. To secure manoeuvrability in a challenging period in the markets, Schibsted has been in a dialogue with its banks, resulting in increased financial flexibility. This gives Schibsted the room for manoeuvre and time to implement appropriate measures. Including the effect of the appreciation of EUR versus NOK, NIBD has increased through Q4 2008.
The Board of directors of Schibsted recommends a dividend for 2008 of NOK 2.00 (6.00).
Schibsted invites analysts and investors to a conference call today 30 January 2009 at 10:00 CET. Participants will be CEO Kjell Aamot and CFO Trond Berger. To take part in the conference call, please dial +44 (0)20 7806 1968 (or 800 19640 from Norway). Confirmation code 4149404. A recording of the conference call will be made available at www.schibsted.com/ir.
The Q4 2008 earnings report will be released on 27 February 2009 at 07:00 CET.
CFO Trond Berger, tel: +47 916 86 695
Oslo, 30 January 2009
Jo Christian Steigedal
VP Investor Relations