Good day, welcome to the Schibsted Group Q3 Q&A conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jo Christian Steigedal. Please go ahead.
Thank you very much and good afternoon. Welcome to this Q&A session in connection with the release of Schibsted's third quarter report for 2011. Thank you for joining us this afternoon. My name is Jo Christian Steigedal. I'm the IR Officer of Schibsted. Together with me here in Oslo is our CFO, Mr. Trond Berger. We presented today the Q3 report showing operating revenues of NOK 3.4 billion. It was an increase of 5% compared to the same period in 2010. The advertising revenues, including the online classifieds, grew with 9% in the quarter. The EBITDA in Q3 was NOK 531 million compared to NOK 567 million in the same period in 2010.
operator, please go ahead with the Q&A session.
Thank you. Ladies and gentlemen, if you wish 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 a question. We will pause for a moment to allow everyone to signal. We will take our first question from Henrik [Schultz] from SB1 Markets.
Yes, good afternoon to you all. Just two questions. Firstly, could you elaborate just a little bit on the, the Schibsted Growth Media in Sweden, outside, of course, from Hitta.se and the businesses that we know? They, they seem to have performed quite strongly in terms of revenue growth, in Q3. Would you be able to add some details on which particular businesses out of that combination of several small businesses sort of stand out? Because I thought it was an interesting set of results, please.
Yes. The Schibsted Growth Media business, that growth that we've seen in Q3 is, first of all, in companies like Lendo, which is a consumer loan marketplace. We also have a price comparison company called Prisjakt, and a company called [Bestill] competing with Groupon, taking market share from Groupon in Sweden, and larger than Groupon as an example in Gothenburg. We also focus on personal finance, meaning that we are building up services within insurance, a marketplace for insurance brokerage, and also for service services for craftsmen, et cetera. We will particularly focus on personal finance as a growth area going forward.
We are looking into the same in Norway, using the strong traffic machines that we have both in online newspapers and the classifieds, and then direct traffic into startups. As an example, we are building up personal finance, a part of FINN.no, like penger.no, which is money supermarket type of service within real estate loans. There are many ways to grow these type of online marketplaces, which is, first of all, that what it is.
Okay, thank you very much. A completely separate question, if I may follow up with just one more question. Relating to the rationalization program, the target of NOK 190 million-NOK 200 million in terms of annualized cost savings by 2013, what would that refer to? Would that refer to the, in a sense, the end of year 2011 or full year 2011 cost base? The reason I ask is that it seems to me that you're making a lot of headway already this year, impressive headway in terms of cost reductions, and cost savings. Should we compare the NOK 190 million-NOK 200 million?
Should we compare that to, I don't know, you know, the status as of the first half of this year or to last year or to the full year level of cost for this calendar year 2011, please?
It's first of all comparable to the 2011 full year result. The effect will be taken out in 2012-2014. The main part will be in 2012 in Sweden, and then in Norway, it will be over the three years. 60%-70% will be taken out in 2012.
Okay, thank you very much.
We will take our next question from Catherine O'Neill from Citi.
Hi. I've got three questions. Firstly, on the Google and Eniro partnership that was announced this morning, I wondered if you had any view on what implications for Hitta.se could be in terms of competition. Secondly, I wondered what you're seeing in terms of print prices going into 2012. We're hearing that they potentially are gonna be down. Thirdly, just if you've got any view or thoughts on what your investment level may be next year.
When it comes to the Google and Eniro partnership, we are aware of it, but we haven't seen any effect of that in the marketplace. We know that Google and Eniro page has partnership in many other markets as well. Hitta.se has a strong position focused purely on online, so expect their growth to continue. It's early days on this partnership, so we don't really know. When it comes to the trade prices, we are just in the process of negotiation that now it will be concluded contract for next year towards the end of this year. Everything is about how they're able to take up capacity because there's overcapacity in the market.
We plan for, maybe more flattish, into 2012, at least for planning purposes. Coming to the third one, that was.
Investment level.
investment level for next year. We see an investment level being slightly higher than what we have in 2012.
Okay, thanks.
We will take our next question from Kristoffersson from Cheuvreux.
Hi there. Niklas Kristoffersson from Cheuvreux. Three questions. Just firstly, just to get a better feel regarding current trading, am I right that advertising growth faded throughout the quarter and was down in September?
When it comes to the, it's a mixed picture. If we looked at the development through Q3, we saw that Sweden, as an example, has been flat to slightly weak in Q3 and continued also in October. However, in Sweden, the online are doing, as an example, quite well in October again. It's a mixed picture. But print on weak, online good trend for time being. The in Norway, we have seen that the market for print has flattened out in Q3 and getting slightly weaker or softer in October. Again, online is doing well. But there is no dramatic changes in trend.
It's just that the uncertainty maybe has created a little bit more cautious stand from buyers. Not long as we draw campaigns and it continues to be more or less as we see it in Q3 and slightly maybe a little bit softer for print and good for online.
Okay. Just the second question on the EUR 20 million cost base in new venture. My number's up EUR 5 million sequentially. How has that development throughout the quarter? Are you ending September with a significantly higher cost base than you started the quarter with?
now you're talking about the.
Yes. New investment.
New investment. Well, no, I think that has been maybe the same as throughout Q3. Of course, July is normally low, and we did some marketing campaign, especially in September. We stick to the guidance, meaning that we will have a fairly high cash burn in Q3. It will be increased into Q4 as we have guided, total spending, yearly basis, NOK 400 million-NOK 450 million. We stick to that. It means that we started up Brazil as an example in July, and we will run some campaigns there as an example. It will be some step up as we guided for in Q4.
Just a follow-up on that. Any particular reason why we saw a sequential top line decline in new venture?
No, there isn't really any because first of all, Q3 is really seasonally very weak and no really sign of that. We actually see good to strong traffic development in all the new ventures. We are overall very satisfied with what we see there, building up traffic in all the sites we are doing. It's just very few that we are not meeting the target that they have set. Most of that goes actually according to plan or better than planned when it comes to traffic. Traffic is really everything about building position in these markets.
Okay. Just a final question and basic follow-up on the Growth Media question. Since you have added a few companies into the mix there, how is the seasonality looking now into Q4? Last year it was quite heavy seasonality in Q4 there. How should we look in this year?
I think normally Q4 is a relatively strong performer when it comes to those Schibsted Growth Media companies. It could also be that we will do some extra marketing campaign and building up position, especially in some of the new businesses within the personal finance. It should generally be a good performance.
Okay. Thank you.
As a reminder, ladies and gentlemen, if you wish to ask a question on today's call, please press star one. We will pause for a moment to allow everyone to signal. We will take our next question from [Bao Slepo] from ABG.
Hi. Could you comment a bit on the circulation development for VG? It's if you look at the quarter in isolation of year to date, it looks like it's down about 6%, but that's still on a second derivative basis is a reasonable improvement from the previous quarter. Are there any signs of the circulation, the sort of free fall circulation decline, slowing down?
We plan for, around 10% decline, in going forward for VG. It's also right to say that I have seen some, better figures in Q3 and also a little bit into October, but it does fluctuate quite much. We are cautious to say that we've had a change in trend. We are planning for closer to 10% decline.
Thank you.
As a reminder, ladies and gentlemen, if you wish to ask a question at this time, please press star one. There are no questions at present.
Okay. I would just like to thank you all for participating and wish you all a good afternoon.
That will conclude-