Please go ahead.
Thank you. Good afternoon. Welcome to this Q&A session in connection with the presentation of Schibsted's second quarter report for-- Sorry, fourth quarter report for 2013. Thank you for joining us today. My name is Trond Berger, the CFO of Schibsted. Together with me here in Oslo is our CEO, Rolv Erik Ryssdal. Today, Schibsted Media Group presented the results for Q4 2013, showing operating revenues of NOK 3.94 billion. The online classifieds segment increased its revenue underlying with 15%, 20% excluding Spain.
The gross operating profit, EBITDA, was NOK 406 million. Excluding the online classifieds investment phase, the EBITDA increased to NOK 686 million from NOK 613 million in the corresponding quarter in 2012. This will be a Q&A session only. For complete presentation of the results, please refer to the video webcast that is available through a link on our website. Please follow the instruction how to sign up to ask questions. I now hand over the operator to lead us through the Q&A.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press the star or asterisk key followed by the digit one on your telephone. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, please press star one to ask a question. Our first question today comes from Jerome Sterk from UBS. Please go ahead.
Hi, good morning, gentlemen. Thanks for taking my question. I think I have two. The first one is on Spain. You probably said that, following the buyout of the minorities last summer, you expected the change of strategy and the restructuring to lead to revenue and profit declines at Anuntis. Does the acquisition of Milanuncios that you've announced today, is changing that view?
Can you tell us a bit more maybe where you are in Spain in terms of restructuring and changing the business? Like what are the kind of initiatives that you have taken at Anuntis? The other one is just a bit of housekeeping, but can you tell us where you are for your two cost saving plans in Norway and Sweden, the NOK 500 million and the NOK 225 million Norwegian kroner? Can you just tell us what you've achieved at the end of 2013? Thank you.
In Spain, I think it's a positive development we're seeing there with this acquisition. I'm quite confident that combined these two, our new units will make better progress than they would have had them. I think it would have been more of a, I'd say, more of a struggle between Milanuncios and us if we'd not chosen to go together. Without giving, you know, any specific numbers, I'm positive to the future development there. I think that's I think this is an important and a good deal for us.
Trond?
Yes. When it comes to the savings out of the program that we have announced, I would say that around 60%-70% has been achieved end of 2014.
60%?
Yeah, 60%-70%. That's... Yeah.
Okay. can I just follow up on Spain? I mean, can you give us maybe a rough idea of sort of numbers for Milanuncios and other revenues maybe?
I think we When it comes to Milanuncios, this has been a site that is very modest, monetized, and so with also a rather small organization. It is a limited P&L impact of Milanuncios. The potential going forward will be that we or Milanuncios don't need to fight so much in the market and marketing spending. Of course, that's a potential.
Okay. Thank you.
We will now take a question from Andrew Ross from Barclays. Please go ahead.
Hi, guys. Thanks for taking my question. I just wanted to ask on Brazil and ask if the charts you presented, showing the KPIs between Schibsted and Naspers include usage on mobile. If they don't, would it have looked any different had you included mobile? Just to follow up from then, given the strong December you had taking shares from Naspers, have you seen any reaction from them in January? Is there any sign they've increased spend to counteract the positive trends you've been seeing? Just wondering what impact Telenor has had on the JV in Brazil, and maybe you could give us some more color there. Thank you.
I just heard the two first questions, but may I answer those. When it comes to the metrics, you know, it's hard to find good sources. Comscore is broad, panel-based, but also takes into account cookied. But they are primarily web-based, so that's the answer to the question. They do not yet. Taking mobile into account. I think it's fair to say that, you know, both are probably doing quite well on mobile.
To see how, I think that would only be a speculation to see how that would have changed the picture. I think the important point here is, you know, we're making good progress. It seems to me that both sides are making progress. I think this is kind of the independent source that shows you, shows you the position between the two sides in the most independent manner.
Wait, you also had a question about if there were any reaction from Naspers in January. We are cautious about giving too much details on this current situation. We stick to the official data and release information about that and come back to Q1 what has happened in Q1. When it comes to the, you asked a question about turnover in JV. That was indeed me, but bear in mind that we closed the Telenor deal beginning December. We just have reported the figure as of X that being included from that date. It's a limited turnover, however, in the JV in Q4.
Okay, great. Thank you.
We will now take a question from Catherine O'Neill from Citi. Please go ahead.
Hi. I've got three questions, actually. Firstly, just more broadly thinking about the group margin. I notice that consensus has got that going up for about 200 basis points in 2014. I just wondered whether you're comfortable with that or whether that seems a bit too optimistic, even though obviously some of the investment will be going into the JV.
Secondly, I just wanted to know what happened to working capital this year. I know it improved in the fourth quarter, but across the year it looked weak relative to last year, and if there was something specific to explain that. Lastly, on Avito, who you did the deal with in Morocco, I know they've got links to Naspers. Is there anything we should read into that in terms of, a potential relationship with Naspers in any markets? Are there any other countries where you see a similar opportunity to merge with the other large player?
Right. When it comes to the group margins, we don't give any more guidance, other than what we have stated, actually, when we also had the invest today. We have guided, when it comes to the online classified top line, which is nothing new on that one. When it comes to the media houses, we have just stated the outlook that it is somewhat more cyclical, uncertainty in Norway, especially in the, in the job section. I think that's about the 2014, what we are going to say. When it comes to working capital, we have had a new advertising system being implemented. I think that actually has lagged, somewhat, our invoicing.
It has been around NOK 100 million plus that worsened the figure on the working capital. That has improved somewhat towards the end of Q4, but there is still something to be cleaned up, so some slight effect still there. When it comes to Avito, I mean, of course, if you look into Avito, Henrik is the main shareholder and rather spread shareholder structure. We of course have been discussing with the Avito people as such, and don't really comment upon whether that implies all the potential, so to say.
Okay, thanks.
As a reminder, ladies and gentlemen, to ask a question, please press star one on your telephone keypad. We will now take a question from Mark Bailey from Deutsche Bank. Please go ahead.
Yeah, good afternoon. Three from me. First one, just I know you're not going to guide on the level of startup investment, but just to check my understanding, you did have one month, i.e. December, where the spend in the 701Search assets was being effectively spread across three parties. When we think about the scale of the investment in the fourth quarter, that was already at least partly mitigated by the recent deal. That's question one.
Second question is, has the experience in Spain kind of made you think differently about what the right terminal margin is for these businesses? You know, effectively the situation where you had market leadership, you lost market leadership. You've now at a relatively high cost had to buy that back. Has that changed your view about overall the right margin for the classifieds business? The last one is just a technical, weather related question, actually.
Just in light of how well you did in Sweden in the fourth quarter, I just want to check, should we be assuming that the first quarter in Norway is going to be particularly strong? You did have a weather related problem in the first quarter of Norway in 2013. Is that unwinding this year? I will confess I haven't checked your weather so far this year.
You let me be the weather guy. I think actually, as you said, in Blocket in Sweden, there was a positive weather effect. It was very mild winter in the Q4. That has actually had a positive effect. I haven't seen yet anything that should conclude that the winter now will make the Q1 very different from last winter.
I think when it comes to FINN in Norway, what we said today at the analyst presentation is that, you know, they're doing well and, but their main thing that they might be vulnerable to is the job listing because there's this somewhat softer macro environment in Norway now, and we saw that at the end of last quarter, and we're seeing that also at the beginning of this quarter. Your question then, regarding Spain. No, this has not changed my view on classified sites like FINN, Blocket, and Leboncoin.
In Spain, we've never had the same margins. I don't know for those of you who followed us for a number of years, you probably know that there's been a kind of a special situation in Spain with several owners, where we only acquired the majority and the executive management last summer. There has been a bit of a special situation there, but I'm very positive to the situation going forward now that we have included Milanuncios in the portfolio. The first question, Trond, I'll leave that to you.
Yeah. Well, technically, you're right that, from beginning of December, it will be, has been then 50%, in the JV countries and, 1/3 in some Asian, where we have three partnership. It has some impact, but, some not also a little bit, yeah, a limited, more limited effect, in the JV partnership, I would say.
Okay. Sorry, just one follow-up. From an accounting perspective on Spain, does the implied value now of the enlarged business, does that Is this gonna create any kind of accounting gain or loss vis-à-vis the implied value of the business in July when you bought out the Anuntis control?
No, we don't see that being an issue. I mean, you never know what could happen in the macro environment in Spain. As we see it as of today, fair to say that we don't expect that.
Okay. Great. Thank you.
As a reminder, please press star one to ask a question. We will now take a question from Rasmus Engberg from Handelsbanken. Please go ahead.
Yes. Hi. Hi, good afternoon. I wanted to just come back to the acquisition. Is it fair to assume then that we shouldn't really, you know, initially consolidate in any sales and EBITDA of particular size from this company? Okay, can you give us any sort of indication on that?
Well, as I said, limited, P&L in Milanuncios because they haven't really monetized much. As I said, there is of course a potential over time here when it comes to marketing.
Yeah. Yeah.
I don't think I have more to add than that actually.
Yeah. I think, going forward from, you know, later this year and particularly next year, I think, it gives us some good opportunities to monetize in other.
Yeah.
-manners because we have a good sales force in Anuntis, and then they can also add, you know, all the pages of Milanuncios and in their portfolio. I think we see there some good monetization potential in the medium term.
Yeah, that was my second question a little bit. I was a little bit surprised that you say not very much at all on how you intend to sort of develop your own businesses relative to Milanuncios. I think that when I looked at them, they seem to be in all your verticals more or less. Is that gonna be the case over time, or do you see a sort of a-- I mean, obviously, the only thing we've seen is Avito in Russia, where you essentially closed the smaller sites. I guess you're not saying that here. Is there any other sort of separation of target groups or anything that you have planned?
I think the good news here is that the sites that we're having, they're complementing each other. You know, Milanuncios is complementing the other sites we're having. In terms of ads and users. I think we'll have to decide going forward as to what the optimal portfolio would look like. The plan is definitely to continue the Milanuncios site.
Yeah. Yeah. Can I just ask, you know, sorry, just to stick to that issue. Milanuncios went to market leadership. Surely they must have had, you know, quite a significant marketing spend or, you know, is there really nothing you can say on their costs or sales in, you know, any historic period?
You know, I think that, they've obviously had, some, money to spend on marketing, and we saw that last year.
Okay.
In general, I would say that compared to many other countries, this has been a site that has grown organically with relatively limited marketing spend.
All right. Sure. Can you also help us to explain or, you know, sort of explain what's going on with FINN in the real estate market? I saw some of the statistics from housing agencies saying that, you know, ads stay much longer on the site. You know, how, what is the development there, and how does it impact you?
No, I mean, I mean, the situation as of today is not very much changed to what it has been over the last month, during the autumn. The housing market has slowed down in Norway, that meaning that the listings stay longer on the FINN site. But we sell here packages, so it doesn't really matter so much whether it's a long time on the site or not. But not-- So no big change in Q4. As of today.
Volumes are sort of unchanged or?
Well, the volumes are somewhat higher in number of listings in that-
Yeah.
...second half, also.
Yeah. Okay. Thank you.
Ladies and gentlemen, we currently have no further questions in the queue.
Okay. Thank you very much for joining us today. Have a good afternoon. Thank you.