Today, welcome to the Schibsted Media Group Q2 Q&A session call. Today's conference is being recorded. At this time, I'd like to turn the conference over to your host today, Mr. Jo Christian Steigedal. Please go ahead, sir.
Good afternoon and welcome to this Q&A session in community connection with the presentation of Schibsted's second quarter report for 2012. Thanks for joining us this afternoon. Today, we released the Q2 report showing operating revenues of NOK 3.8 billion. This was underlying an increase of 2% compared to the same period last year. The online classified operations increased their revenues by 16%, and the revenues of the media house operations in Norway declined by 2%. Schibsted Sweden, the media houses there, had a decline of 1% in revenues. Underlying, the EBITA was flat compared to Q2, 2011. I'll just hand the word back to the operator for and go straight ahead to questions and answers.
Thank you, Mr. Steigedal. If you would like to ask a question at this time, 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 your question, and we'll pause for a moment to allow everyone to signal. We'll take our first question from Nicholas Christopherson from Cheuvreux. Please go ahead.
Yes. Hi, Nicholas here from Cheuvreux. I have 2 questions. firstly, I'm just after some color on the expense, the investment. year- to- date, you have sort of annualized standard level of close to NOK 600 million. Now, I wonder is the traffic development, is that in line with your expectation? Or is there some sort of inflation in Google AdWords that explains why you're spending ahead of guidance?
Well, the traffic expectation is in line or is somewhat better than what we had expected. When it comes to the spending level, that will vary somewhat from quarter- to- quarter. We've given an estimate of NOK 500 earlier on. That's a rough estimate, and it might, you know, go a little bit up from that. We're, we've said that this guideline of roughly NOK 500 still stands for a whole year.
I guess it should be coming down in Q3. Just secondly, I wonder if you can be a little bit more specific regarding the development in Leboncoin. Just personally from a top-line side, is the amount of deferred revenue there increasing?
When it comes to Leboncoin, we are of course, satisfied with the development we see. But also bear in mind that we're meeting quite strong sec in half figures, especially for professional car dealers. That was a good pickup during Q3, Q4 last year. But we still expect quite good growth figures. There isn't, I would say, you should look upon this development more upon what you have seen in the uptake of the professional car dealers as one of the aspects.
Are the professional car dealers, aren't those type of revenues deferred?
No, they're not really deferred, because there is an automatic upload, and they pay some kind of fees, when they're doing the automatic uploads.
Okay. Just on the margin side in Leboncoin, it seems like you've been somewhat cautious regarding that going forward. Is there anything specifically that should explain a larger step change in your cost base there?
Well, what you said for Leboncoin, the same is that, you will see the same development there as with Blocket. That is that as this company expands into new products and new verticals, you will see, they will need to do investment to take care of that. That's why the margins will probably be somewhat lower. Of course, you know, this is all in order to be able to generate more growth top line.
Okay. Thank you.
We'll take our next question from Dag Sletmo from ABG. Please go ahead.
Yeah, just some questions on the online classifieds. With regards to Leboncoin, as I listened during the presentation today said that the growth, you know, it's difficult to say what the growth will be in the years ahead, it's actually, you know, it should continue along the lines we've seen, if I understood him correctly. I'm just wondering if you could shed some, put some more color on that. Will we see 60% growth in top line for Leboncoin as we did in the first half of this year? If there's a slowdown, as you mentioned, because of this base effect, if you could maybe quantify that a little bit.
Secondly, how should we think about the growth rate in FINN, which was maybe a little bit lower than, I think at least we expected. Finally, in terms of Malaysia, if you could elaborate a little bit more on how that is going on the back of the positive statements made at the presentation earlier today.
When it comes to the development in Novaqua, I touched upon it on the last question. We have seen a strong development in Q3, Q4 in 2011. We are meeting comparables, fair to say. I would be cautious to say that we should match the same growth rate going forward as a result of that. Having also said that, it's a good underlying performance we are seeing in Novaqua for time being. But I wouldn't give any guidance when it comes to the growth rate in second half, other than stronger comparables.
When we are talking about FINN growth rate, well, FINN was. It was hampered by the lower volume in job, et cetera, in Norway, second half. We expect FINN to come back a little bit more on a track that we have seen. There should be also some effects from what everything we are doing in new product investments. The Muda development is, I mean, we are still talking about fairly small numbers here, but we do see quite good growth in Muda. That should go into a break-even situation rather soon.
Yeah. I think I can add there that I'm very happy with the development in FINN. The growth will vary from quarter to quarter. The important thing for me is that I think they're doing the right things and they will continue to develop well for a good period of time. All right.
Okay. Thank you.
We'll take our next question from Tilman Imisch from Berenberg Bank. Please go ahead.
Yeah. Hi, Tilman here. Thank you for taking my questions. First question on the cost-cutting program, the NOK 500 million. Can you please remind us on when are they gonna kick in? I think you said 2013 and 2014. Is that gonna be before inflation or after inflation? Next question on the restructuring charge for that program. Is that gonna be this year or is that gonna be next year? On online classifieds, a couple of questions. Blocket and Bytbil saw some one-off effect in growth rate this quarter. Can you explain us what that was and if that's gonna disappear in Q3 and Q4? Then quickly on Brazil, how is competition developing there?
I read in Naspers transcript that they are concentrating with OLX now on Brazil after they decided to concentrate on a couple of countries. How is competition developing there and also with SEEK investing in job portals there? The last question, the negative EBITDA contribution of new ventures of NOK 500 million, how do you think that's gonna develop in the next two to three years? Thank you.
First on the cost cutting program, we have said, effecting 2013 and 2014 over that period. These are figures are before inflation. Certainly we have some underlying inflation and cost increases in the media houses. It's, so we have to calculate those. The restructuring charges are most likely to come in Q4 this year. According to IFRS, we need to have a clear communication towards the employees before we can account for those. The Blocket one-off, there, the 9% top-line growth that we have in the analyst presentation, that excludes the one-off in Blocket. That is a real underlying performance comparable.
There are just a few NOK million on the 56% margin figure that you see in the Blocket. Underlying Blocket performs very well. We saw some weak car sales in Sweden, second quarter, expecting that to pick up again. The Brazil competition is, I would say, there isn't any new there when it comes to the, we are performing very well, I would say, at Bom Negócio, doing strongly on Paid Search. We're happy with that.
Yeah. Yeah. You know, I think we're very happy with what we're seeing in Brazil. I think it's a promising market. I think our sites are developing well. Obviously there's going to be many players here who want to take part of that. I'm confident that we have both very good product, good people and financial resources to be the winner in the long run here. It's going to take time.
New ventures, NOK 500 guidance roughly in this year. I think we are hesitant to give any further guidance over the next two, three years. Other than that, we certainly will continue to do spendings. We see also still further opportunities. I think we will come back with more details on that.
Okay, thank you very much.
Again, as a reminder, ladies and gentlemen, to ask a question, please press star one on your telephone keypad. That's star one to ask a question. We'll take our next question from Mark Braley from Deutsche Bank. Please go ahead.
Yeah, good afternoon. Just 2 questions. First of all, I wonder if you can sort of tell us within FINN the deceleration in growth from 18% to 6%. I appreciate that, you know, there is sort of effectively kind of noise in the growth rate quarter to quarter. Was there a particular point in the second quarter where the growth slowed a lot? If so, you know, was that just jobs or was it just cars or whatever that caused that? Then the second question was, in terms of the outlook commentary, you talk about weaker print markets. Does that apply to Norway and to Sweden? Obviously, you actually had a reasonably good second quarter in Sweden on the football impact.
I'm just wondering whether we should be looking for Sweden actually getting a lot worse into the third quarter.
Right. I think that if you look at FINN, it's really a combination of a weaker job market and the car market. I think we have to kind of accept that FINN is so strong that they'll be partly reliant on the economy there. In addition to that, I was somewhat disappointed about this, about the brand advertisements. That was actually weak market for brand advertisements in Norway in the second half. FINN also did not enough there. I think they'll come back a bit stronger there. Overall, I'm, you know, I'm confident for FINN's for FINN in the both the short and the medium term.
Mm-hmm.
When it comes to, when it comes to the start of the third quarter, well, we've said that applies actually for, both Norway and Sweden when it comes to the, to the ad market. Of course, we haven't today during the presentation covered, the price sheets we have in Spain and France, but those are also involved, although there's, of course, much smaller numbers there.
Okay. Can I just ask on the new cost-saving plan, should we think about this sort of in two years' time as being about protecting margins, or can it actually help to rebuild margins?
I think we, I think it could be ambitious to maintain margins or even enhance margins, fair to say, in the traditional media. On the other hand, it certainly helps this program. We also see, typically part of our business, like Aftonbladet is doing, quite good, I would say, in this environment. We expect especially the online part of that to continue to grow strong. It's a mixed picture. For the traditional print, it could be a challenge to keep up with the margins, even if we initiate this program.
Mm-hmm. Okay. Thank you.
Again, ladies and gentlemen, as a reminder, to ask a question, please press star one on your telephone keypad. We'll take our next question from Rasmus Engberg from Handelsbanken. Please go ahead.
Yes. Hi. First question, I'm sorry if I'm asking someone else's question again. I had a bit of problem getting connected. I was wondering about the comments you made on the classified market in Scandinavia. Is that a comment about the slower growth in the second quarter? Is there more to come when it comes to being cyclical? How should we read that comment, really?
I think FINN is so strong in the job market. There is some, there is some element of the cyclicality when it comes to the job market, and that's specific to FINN. I think, you know, if you have big variations in the car market, that will affect Blocket also. I think you saw what actually happened in the Swedish car market with that in two of three months in the second quarter, new car sales went down 20% compared to last year. That has affected the volume because people don't sell their car before they acquire a new one. As I understand, that market is now somewhat better for new cars again.
Okay. The second question, I know this is difficult for you to comment on exactly, but you have been historically sort of able to having savings at a 1-to-1 ratio to your charges. Is it fair to assume somewhere around that level when it comes to one of course?
Sorry, could you repeat that saving one-to-one?
Yeah, if you're gonna save NOK 400 million, did we expect to start of somewhere around NOK 400 million-NOK 500 million?
I would say, no, I think if you look at the It has been different programs.
Yes.
maybe closer to 50%-60% of the savings in that area. I mean, if I could give some guidance on what we have had historically.
Okay. All right, good. Just an introductory question. I'm trying to figure out how your the units that you recently have recently classified as established by profitable businesses in your online classified business. Can you give some sort of indication of where the margins are in aggregate for instance, Austria and Ireland?
sorry, your line was very-
Very hard to hear you actually.
Do you ask?
Okay.
the margins in Austria and.
Yeah.
Italy?
Yes. The combined margin for sort of Austria, Italy and Ireland. You know, can you give some sort of indication of where they are today?
I think we are hesitant to give guidance on such a detailed level before they're getting a certain size. Ireland, the business model there is that they charge a listing fee for all listings. Certainly they are in a different situation. That has for historically been like that. The Italy and Austria are doing well, and we're not disclosing any margin figures.
When you say that they drag down the margin, they're still profitable, right?
Well, I mean, it's certainly a dilution of the margin in the established classifieds because.
Absolutely.
coming from a lower level, certainly.
Okay. All right, thanks.
Ladies and gentlemen, as a reminder to ask a question, please press star one on your telephone keypad. That's star one to ask a question. I'm gonna take a follow-up question from Dag Sletmo from ABG. Please go ahead.
Just a question on the general advertising market. We see that the advertising market in both Norway and Sweden seem to be a bit weaker than what we would expect, just looking at the general GDP growth. Could you give us a little bit of color around why that is? Is it just that the uncertainty in business in general is very high and that makes people hesitant? How do you think that this will develop going forward?
I think we see, the general picture is that, the advertisers are cautious, due to the uncertainty, although the general consumption by or on the consumer's confidence is fairly strong. Over time, of course, those should be more in line. For time being, we're seeing them being a little bit cautious both in Norway and Sweden, fair to say.
Yeah. If then the situation just continues as it is with no major sort of, say, either improvement or deterioration, for example, in the Eurozone problems, would it then be reasonable to assume that at some point you could see a catch-up in the advertising spending?
It's a hard question. I mean, we don't have any. I mean, we of course we are unable to really see some bookings and forward looking in that respect. Let's just hope so. It would be hard to be answering that question more than. Normally you should see some effect of it. We wait and see.
Okay. Are there any further questions?
We'll take our next question, a follow-up question again from Tilman Imisch from Berenberg Bank. Please go ahead.
Yeah, hi. It's me again. I forgot one question. For the cost savings, can we assume NOK 250 million in 2013 and NOK 250 million in 2014, or is that skewed towards 2013? The second question, when do you think you can start with Leboncoin to go more aggressively into real estate and jobs? Thank you.
Guidance on the cost-saving program, detail planning is undergoing. I would say NOK 250. If you don't have any better guidance, use that. When it comes to Leboncoin real estate, I mean, they have certainly high volume than SeLoger outside the Paris region, and large number of objects there. We still have a contract together with our partner, previous partner in France, over the next two and a half year. There are some limitations on how to go aggressive into the real estate market in this period. I think we have to wait and see before we will see any effect of the real estate in these markets.
Okay, thank you very much.
As a reminder, ladies and gentlemen, star one if you wish to ask a question at this time. Gentlemen, we have no further questions in the queue.
All right. I think, we'll end here. I'd just like to thank you all for dialing in. Have a good afternoon and a nice weekend. Thanks.
Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.