Good morning, everybody. Welcome to this Quarterly and Full-Y ear presentation for Schibsted. So, 2016 has been another eventful year in the media industry. Transformation happening at an increasing speed all the time. In the middle of this, I'm happy with the way Schibsted have performed. We are continuing to develop all our major business areas. We're continuing to invest in product and tech, and I believe it will deliver also good results for the full year. The headlines for the full year is that our classifieds business continued to deliver good growth and also with good margins. In France, Leboncoin continues to do very well. We have launched real estate, and we have a bit more than a year ago as a standalone. We're launching job verticals. That's going well.
I think in Scandinavia we'll we have continued high, the growth for our classified sites. In Spain, it's been more of a challenging year, so let me get back to that. Most of all other classified businesses in the emerging markets are continuing to do well. On publishing, many interesting things are happening, but it's a challenging advertisement market of course, especially for print. What I'm happy with is that to see that we're constantly rolling out new products in the ad market that are being well received by advertisers. Another positive thing is the digital subscriptions, of course, that continues to climb. For Schibsted Growth, there's been a strong and continued positive development, especially in the field within personal finance, but also actually in price comparison.
Then the board has proposed to the AGM to keep the dividend of NOK 1.75, which is the same level as last year. Those are some of the highlights from 2016. Let me go more into it. I don't think here are some highlights from the Q4. I won't go into that now, as I'll get more into it during the presentation. This is the agenda that we're going to go through, and Trond will take care of the finance part. Together with me also here are several senior representatives from management, the team will be able to answer questions. Let me start with online classifieds. Online classifieds has been a good business for Schibsted for many years.
As a combination of organic growth and acquisitions, we've been able to keep a good and steady growth rate and thereby creating good value for our shareholders. Let me talk a little bit about the model, because online classifieds is a great business model. I think we've proven throughout the years that it can continue to have high growth rates. I think FINN is the best example of that, 16, 17 years after launch, that they still continue to develop the business in a very good manner. As you know, there's a lot of leverage in that model. A lot of the costs are fixed, meaning that when you achieve top-line growth, it's very value creative. What I also like to state that there is further potential for us in the classifieds business.
We can do more in organic growth. We've done some in-market consolidation previously. We believe there is a further scope to do that and we have the financial strength to do it. What I also like to stress is, of course, you know, classifieds is changing like other businesses, whereas I would say a few years back, it used to be more when you establish position, it used to be more of a marketing-driven game. Now it's much more a product and technology game. That's why we're investing huge resources throughout the group in order to enable us better to be at the forefront of that development.
If you look at our portfolio, you can see that I like to call it a balanced portfolio because, well, most of our sites are in the developed phase, and you know the big ones, the big countries. They contribute of course, the lion part of the revenues, but also the biggest part of them, of the results. There are several contributors to that. The good thing is that also other sites, rather than, in addition to the 4 main countries, continue to grow. Investment phase has a very positive revenue development. You can see that the EBITDA result is at the same level as last year's.
Let me stress that this is as expected, mainly to do with our investment in Blocket, and this is as we have actually also guided the market on. It's also important for me to underline is that most of the revenues from our classified sites, they come from the verticals. Real estate, cars, jobs, those are the main verticals. That's where you find most of the professional customers, and they are the ones who generate most of our revenue. Generalist is also contributing mainly also as a traffic driver. Let's start looking at the sites. I think I'll start with the leboncoin, which is having a very positive development. They are actually increasing in all in all their verticals, so we know that real estate is going very well there.
They also increased the monetization in cars. The exciting thing now is that they've started monetizing also their jobs revenues. With the volumes you have in Leboncoin, of course, what happens when you start charging is the volumes drop. The volumes that are still there and that we're charging for is actually still a bit ahead of our expectation. The start has been good. We get questions to reveal more information about Leboncoin from time to time. I won't take you through all this. This actually shows them the within cars and real estate, what's the position of Leboncoin compared to competitors. That's in the terms of market shares and traffic positions. It takes some time for you to study this.
The point that I like to underline is that Leboncoin, as you can see, has a very solid position, especially when it comes to traffic. It's also that Leboncoin, especially in real estate, but also in cars, has a potential to increase and increase their revenue. I think Leboncoin is in a very solid position. Come to Spain, situation is more mixed. I would say that the last six months has been a disappointment when it comes to the development in Spain. Whereas the jobs part and the cars are doing well and continue to grow, I think I've been more disappointed with the development in real estate and display advertisement.
What we've seen, particularly in the fourth quarter, is a stronger competitive pressure in real estate, especially on price. That, of course, affects the revenues. We are not just watching that carefully. I think, of course, we're going to respond to that, and it's important for us to maintain and keep our market shares. As you noticed, we also have acquired the third player in the Spanish markets, Habitaclia, I'm very happy with that, has a particularly strong position in Catalonia. At the same time, we're continuing to develop the product continuously. There are a lot of new features coming up. Easy to draw if you are somewhere in Spain, and you want to show which area do I want to search for.
We have all those kind of search facilities. I think it's fair to say also that both with that portfolio Fotocasa and Habitaclia, I think we're well prepared and we're going to continue to invest in product development and make sure that we are an aggressive leader in this market. I would say overall on the micro situation, think things looks a bit better now in Spain, and that gives me, you know, therefore I have a positive view on both the job sector and also the cars.
The car sector, I think is also doing very well traffic wise, now we have the opportunity to combine Milanuncios together with Coches.net, and I think that is a very attractive offer for advertisers. Okay, back to Norway. Very solid performance by FINN last year, and you can see these, the growth numbers, although personal finance is included there, the bulk and the majority of the growth comes from the classifieds, the main parts of FINN. I'm very happy to see that and the development taking place in FINN. Should dive a little bit into it. You can see that jobs actually is doing very well in the fourth quarter.
I think it's fair to say that it's especially in the eastern region and middle part of Norway where we're seeing a strong development in jobs, and it's especially construction sector. Cars is also having a positive development. Of course, we can see that people immediately search into what is the most popular thing. I think the day there was a ban on diesel cars in Oslo, suddenly the search for for normal petrol cars searched like 70% or something. I don't think we were curious whether there'd be a lot of diesel cars on sale the next day, but that hasn't really happened so far. We'll see how that develops.
When it comes to real estate, I would say that, well, although the price development is increasing, the volume has been flattish or actually a bit down. I think it was 4 or 5% down year-on-year basis. Of course, that is connected to what you're seeing with the price here. There is a lot of buyers, not that many sellers. When it comes to FINN and the app development, I think I'm very happy with that as well. You can see that FINN Torget is actually growing healthily. Both in traffic and the number of ads. I encourage you to use it like I do it myself. It's a very effective marketplace.
Of course, there'll always be other players trying to enter the classified space. We've lived with the Facebook groups for a number of years. That doesn't really seem to impact FINN in a negative way. I would rather say it's enlarging the market. Same thing with some of the new native apps we're having. We're, there's a couple of new players in the Norwegian market, of which Shpock is owned by us. You know, I think they're also contributing to enlarging the total market, but very, very far from FINN when it comes to the impact and also effectiveness in marketplace. All right, moving over to Sweden. It's been a good year for for Blocket overall. I think I'm...
Remember I said at the last presentation that the fourth quarter won't have the same growth rate as the previous three. That was due to some price increases being done at the beginning of the fourth quarter in 2015. I think, what is going well in Sweden is the jobs, where we're taking increasing market shares. The focus for Blocket this year will very much be product development and working together with their customers. Other developed markets, as we call them, there are a number of those, as you see. They are now, for the fourth quarter, but also for the full year, actually contributing positively also on the result line. We're seeing a positive revenue development in across all of those sites.
I think if you look at Willhaben in Austria, they're getting some real traction now when it comes to the ad market, and that development is also seen in some of our more mature markets. That's good to see. Brazil, a lot of focus on Brazil. Well, what I can tell... I told you last time that we just started monetization there. I would say that the development is continues to be positive. There's a seasonal drop there, of course, in traffic when it comes to Christmas season. The important thing is that we're on track, and the company started charging for a number of ads last year in the pro segment, and that has continued to go well.
That's why we said that sometime this year, they will reach break even. Right. Then, over to Shpock. Shpock is our native app that is, of course, a big force now in the U.K. and Germany market. We have it also in Norway and Sweden and Italy. It's one of the biggest native apps actually globally with a total number around 35 million. It's the biggest native marketplace in the U.K. and Germany. I think, as I mentioned in Norway, these apps are actually contributing to enlarging the market, making it easier and more accessible, attracting some young sellers and buyers. I think this is an interesting entry for us into those two big markets.
I'm quite impressed there's a number of entrepreneurs who started these companies and the way they're developing, continuously working with the product, measuring the sales rates, et cetera. The transactions they're able to close in Germany and U.K. is actually increasing. That's that was the classifieds part of the business. For the media houses, of course, we know there's challenging times and we're, you know, doing two things at the same time, both investing in product and when it comes to advertising, when it comes to reader products, and at the same time, also keeping a very close eye on the cost side. I think we've been...
We had a good year there, where you see that, actually the margins has come a little bit up. There's operating expenses have been reduced. Print advertising revenues as expected. I think, important thing again is, you know, there's so many things happening on the product side. Digital advertising revenues slightly down last year. I think we're seeing a more positive trend for the media houses at the beginning of this year. What we're seeing now is that the products that we're rolling out when it comes to what we call targeting products. That means that, you know, you can...
Advertisers can buy based on geography, based on gender, based on age, and also now more and more on intent and interest. That's one example from outside Bergen, where, you know, the combination of FINN together with Bergens Tidende and VG made fantastic effect for advertisers. We're seeing more of those coming. I'm very happy too that we have invested in that, and we'll continue to develop those product. Of course, digital subscriptions continue to grow. You can see that the digital subscribers have gone up. Here you see that Aftenbladet and VG is doing well. I think perhaps the most significant development we've seen last year is of course that the subscription newspapers, and there we can see particularly in Norway, has had a very positive development.
Overshooting the target that we have, looks good also this year. There's a positive spirit. Many very talented people are working continuously with product development. Let me give an example here because for those of you who are not on Snapchat, I would advise you to go on Snapchat. Many might be like myself that you have teenagers who are there and that's why I started using Snapchat myself. Snapchat is actually a very, you know, for the younger people, I would say 14-18, very effective channel to reach those. In many ways, much more effective than Facebook. VG is now running on Snapchat as the first Nordic provider of content there.
They provide video content and, you know, it's news, sports, entertainment. So far that seems to be very promising. Actually, the ads there were sold out in, I think, less than 2 weeks. This is kind of then the first opportunity for those advertisers to reach the Norwegian people who are on Snapchat. When I say people, I mean the bulk of it is actually them girls in the age 13, 14 up till 17, 18. Very attractive group for advertisers. We're also learning a lot by doing those kind of those kind of experiments. Right. I'll turn my attention to Schibsted Growth. Well, Schibsted Growth has existed for a number of years and I would say continue to do well.
You can see that Hitta.se is part of it, price comparisons and others. Of course, personal finance is the one that has been growing mostly the last few years. Here you can see the Lendo part in Sweden, which has had a healthy growth. These are full year numbers, and it's also going well in Norway and has been now launched also in Finland. Finally, before handing over to Trond, let me give you a short update on some things we're doing on product and tech. Well, let me start with the classifieds part. What we're doing and what we're developing this year is a lot of tools for the verticals in those 6 big markets in order to serve the professional customers better.
We think it's very important to keep a close relationship with the big professional customers, be it real estate developers, real estate brokers, car dealers, et cetera, et cetera, and develop products that can make their life easier and better. We have focus on developing there, and there you can see the countries where we prioritize that. In addition to that, of course, we're also working hard on finding on developing the next generation marketplace. We have an exciting project internally that is we call Rocket. It's now being tested actually in some markets. That will be the next generation that will replace the legacy platforms. We believe that that will be a much smoother and better classifieds experience for users.
A lot of activity going on there, especially within development in classifieds. Of course, ad products. I mentioned some of the ad products that we're working on in Norway. We have introduced a number of features in Norway, as you can see here. Some of it is also introduced now in France with after some startup problems in the middle of last year. Now we're running well. We'll also run out this, we'll also run it out in the major markets later this year. This is a cooperation with AppNexus, and I think it's they are very dedicated to developing the right products for us. Of course, the media houses, we are constantly developing those. I mentioned the Snapchat experiment. Kjetil mentioned other examples.
Here also we're doing testing of new products that will be much more personalized than what you have in the market today. A lot of interesting developments and experiments going on there. Right. Okay. That's it for the business activities. I think I'll leave it to you, Trond.
Thank you.
Over to finance.
Thank you, Rolv Erik . I'll walk you through the finance part. I'm happy to report that, if you look at the full year 2016 and before investments, we have NOK 2.9 billion in profit, gross operating profit. That is actually a record year. Good to notice that. Looking at then the fourth quarter, also we have a solid performance, and we have NOK 682 million compared with NOK 627 million, if you look at the operating profit before investments. We then have profit before taxes of NOK 288 million, which is up, of course, compared with last year where we had a significant impairment, especially in connection with the media houses in Norway.
If we look at the development between then the two quarters, you see that we have a continuous good development in France. The same also with the classified in Norway and Sweden. Bear in mind that in Sweden, we have continued to do branding in Q4, especially related to job and also some other branding of Blocket. Spain is clearly the somewhat weaker, but it's a promising prospect going forward. We do see still continuous growth in the online classifieds in the other countries. Media houses continue to do well both in Norway and Sweden. Of course, as Rolv Erik said, we continue to invest in product and tech.
If we look at the different segments, we see continued online classified improvement in if you compare all the quarters from 2014 to 2016, so that's good to see. Also we have a stable development and actually a slight increase in Norway in the media houses. Which is, I must say we are very satisfied with knowing that, of course, the print has declined significantly in the same period. The same goes also for the media houses in Sweden. If you look at the different markets in our classified business, you see that, I mean, France, strong quarter, I would say. Also there, we did a bolt-on acquisition with MB Diffusion, which around 3% effect of that in the figures.
Then in Norway continues good growth in FINN, and Sweden as well, although we have done some marketing there. Spain is, as I mentioned, a slight disappointment but some more promising prospects in especially job and cars going forward. Worth to notice that in our other developed market, we have 22% growth, and starting also to be a meaningful contribution over time to the EBITDA. Overall, I would say is solid and good quarter for our main classifieds operations. We have investments as we have talked about.
If you look at 2016, our main investments there has been into, first of all, Shpock in U.K. and Germany, doing by the way, great, and also then in Mexico, and some other markets. Our JVs continue to go down. We see good development, especially in Brazil, as we have talked about. Going forward, we also expect that to improve, and we will continue to do some investments, of course, in some other markets and also into Shpock. We have, just to restate what Rolv Erik said, we remain with the target of 15%-20% online growth, and that's also what we have delivered over the last few years.
We believe that we can continue to use some operational leverage in our main operations. We will continue then to invest in product and tech. We also foresee that we in 2018 can take out some, of course, further efficiency and duplication in that area. If you look at then the spending, we restate what we have said before that it will go significantly down. That's the same as we said in Q3. There is also a slight increase of course in the capital, around NOK 100 million, if you compared 2017 with 2016. Looking at our key financial figures, we have still a good cash flow operating activities.
The CapEx is fairly stable. As I said, slightly up as a result of investments in product and tech. We have an underlying tax rate of 32%. It is first of all, due to that we have significant earnings in countries like France, Norway and other European operations. We pay then fairly high tax rate compared with our competitors like Facebook and Google, which is not nearly paying any tax in Europe. I think that is worth mentioning that we see is a little bit skewed type of a competitive situation.
Looking then at the dividend, we, the board, now has proposed to the general assembly with unchanged dividend of NOK 1.75 per share, and that's according to our policy, both to the payout ratio and also to keep a stable dividend as such. We have a stable, strong financial position, and with a good maturity profile. We have a net interest during debt, or versus to EBT, over EBITDA of 0.5. We have a healthy and good balance sheet to continue to do expansion going forward. That concludes the finance part, Rolv Erik , and I give the word back to you on the highlights.
Thank you very much. For the highlights. Now it works better. The highlights is that for the classifieds, I've been through it, France continued to go well. It's been going well also in Scandinavia. We have had a slower period in Spain, expecting still some price pressure there and competitive situation, especially in real estate, but positive signs in jobs and for the cars. Other markets also going well, especially Brazil on a positive note. Continuing the digital transformation, keeping costs in check, but working a lot on interesting product development in our media houses. We'll continue also then the expansion within the growth sector. Trond mentioned the dividend. Another question that's coming up is, you know, the spending level, which was...
On how much we're investing in new projects, new markets and the Shpock. What we've said there is it's going to be reduced this year. I think as you even said, it's going to go significantly down and then s ome people are asking for even more guidance than that. I think frankly, you should. If I. I think you actually should be more concerned if I gave a specific number. We have a lot of interesting opportunities and we're and we are operating in dynamic markets. There's 11 months left of this year, means it will be a number of interesting opportunities that we may act on and respond to competitors and see what they're doing. We need to have flexibility and agility. That's very important.
Therefore, we said, well, it's going to go down, even be a significant reduction. We're not going to give any more exact numbers on that specifically. Alright, I th ink that concludes our presentation. I'd like to take questions either from this room or from the webcast. Yes, Preben.
Thank you. Two quick questions. Seems like there's been some sort of a one-off costs in Blocket for Q4 that you have not rebranded, but lifted the brand a bit. Could you specify if that's correct and how much money that was? Also if you could be a bit more specific on the competition on real estate in Spain. Is it a new competitor that has suddenly arrived on the scene or one you have been fighting against in the past?
Well to take, the Blocket question first. So they kind of, renovated the sites and invested in branding and also specifically in the jobs. I don't know exact numbers.
We don't give that, but fair to say that the effect on the margin is due to what you just asked about.
When it comes to Spain, I think now it's not a new competitor. There's for a long time been a, I would say more a two-horse race between Fotocasa and Idealista. What we're seeing is more aggressive behavior from our competitor, also lowering the prices and that's affecting the market. Right. Other questions?
Okay. We should take some from the webcast. First, on the CapEx guidance that you gave. You talked about NOK 100 million increased CapEx. Could you specify that?
That is, if you take the CapEx in 2016, close to around NOK 700, and then we guide additional NOK 100 up, so that's the figures, yes.
Okay, on Spain, have you seen any impact from Wallapop's launch of cars and as Wallapop has expanded its leadership in mobile users in December?
We have not seen any impact on that thus far. On the other hand, our own car sites in Milanuncios and Coches.net Is developing very well. Of course, we'll monitor that situation very closely and watch what other players are doing.
It's fair to say that it's a lot of spare parts and very low value items, if you look at the Wallapop. That's the fact.
Yeah, a follow-up also on Spain. Do you expect the competitive situation in real estate to ease somewhat post the acquisition of the number two, three player?
I think that will strengthen our hand in the competition. I think if you look at Habitaclia, they've had a good start of the new year. I think that's a positive thing. I think we're, you know, we're prepared to go into this to gain market share and win that market. Let's see.
Yeah. Then one more on Spain. Are you now allowed to monetize professional cars in Milanuncios? How will this play out going forward? What will be the impact of going from license fees to this new situation?
Well, I mean, it expires end of February. From March and onwards, it will be a gradually ramp up of the possibility to monetize the Milanuncios part. What we have said before is that it could be a positive effect of a few million EUR. Wait and see. It's at least a positive thing for the car segment in Spain. Yeah.
Okay. Then one on Brazil. Could we expect a positive EBITA in the second half of 2017 in Brazil? Could you comment also a little bit on the competitive situation in cars and real estate?
Well, I mean, there are two players, WebMotors and iCarros, which is competitors in the car segment in Brazil. Fair to say that, I mean, OLX is doing great and continue to take market share, both in the... Of course, in C2C, been very strong, but also they continue to take market share in B2C, and also in the real estate market, is doing quite well in Brazil. I mean, we are often getting the question, will it be a break-even situation to the second half? It could be. Let's hope for that, but wait and see.
I'm not so concerned about the month it will break even. What I'm happy to see is this, you know, there's a lot of positive signs in this site. It's huge traffic machine. It's got big liquidity, that in itself gives you big strength when you're entering into the vertical. We've seen it before.
You are also guiding on product and tech investments. Are you comfortable with the consensus expectations for central tech? Consensus is around NOK 735 on headquarters and others.
It was a very precise question. I would say that it is yeah, I think we are. I mean, when we said slightly up, I think it's fairly close to that figure if you take the consensus figure. Yeah.
Okay.
Is there any more questions in this room, by the way? There's someone in the back here. Yes?
Yes. Axel Lengvåg in ABG. A couple of questions, one on Sweden. Growth came in at 3%, and it was due to the pricing effect, and you also saw some negative momentum in ServiceFinder. Just on ServiceFinder, do you expect to regain momentum into 2017, or do you see the momentum continue? Do you expect a 3% growth rate to be representative going forward, or do you expect to improve?
Well, when it comes to the underlying classified operations, we have previously said that we are happy with a high single-digit growth on Blocket. That also was the underlying in Q4. I think that the ServiceFinder is somewhat been in a market where you know that the regulation change from 15 to 16 in Sweden, that we had some tax deduction on these kind of services that had really hampered ServiceFinder in 16. I think it will we hope that we can stabilize the situation and do some improvements certainly going forward.
Thank you. One follow-up question. Investment phase spend in 2017, you're not giving a numerical guidance, but I believe consensus expects some somewhat around EUR 70 million for 2017 in investment spend. Are you comfortable with that figure?
Well, you know, I think I said enough about this. You know, we're doing investments that we believe to be value creative. I think we've proven that now with, is it Mexico or Brazil or now Shpock. I don't want to give any precise guidance. We will stick to what we've said, but we'll not give specific guidance. I think, as I said, I think you should be more concerned if I actually did that, if I put a number on it. I guess some competitors would be happy about it.
Thank you.
Couple of more from the webcast. Do you expect native mobile apps to be able to compete in verticals going forward? Specifically, how about Shpock? What expectations in that respect?
Well, you know, I think Shpock is now developing very well in the generalist market. An important thing for Shpock is to build out and take new segments. I think we'll see what kind of impact it will have also in verticals a little bit further down. I think as Trond mentioned that in some parts, such as spare parts, those kind of things, smaller items, they will have good chance. I think they have a little bit of a different model as well as they are more taking part of the transaction. I think they can also develop other revenue sources such as, you know, advertisement features and perhaps shipping transactions.
I think it's interesting to see the development in U.K. and Germany. Also those are probably one of the two highest value type of markets in Europe. That's why we think it's very promising, at least to develop top positions.
Do you wanna add anything on that, Sondre?
That's fine.
Okay.
Final one for now. Can you give us an update on your thinking around the property offering in Sweden?
The property offering? Well, I think what we're doing there now is to evaluate the situation. We're actually assessing some different way of, some different options, and I think we'll need to come back to that a little bit later. We're looking at a few things that we think might be promising on how to work closer with the real estate agents and their industry and some new concepts. We're not prepared to announce anything about that just yet. I think it's fair to say we have a good dialogue with all the big agencies there and trying to develop products that will be beneficial to them. Okay, any other questions here? Okay.
Nothing from the webcast any further. There's also a phone conference later today, 2:00 P.M. For those who want to attend, please do that. All right. Thank you so much for coming, and wish you a nice continue good day. Thank you.