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ENIRO Q3 REPORT
2013-10-23
Johan Lindgren, CEO
Mattias Lundqvist, CFO
Cecilia Lannebo, Head of IR
01 Johan Lindgren
CEO
3
Eniro – The local search company
“In the digital value chain Eniro is an aggregator:
a search company that filters and organizes local
information“
4
CEO summary
Continued strong mobile growth – “Mobile first”
Launch of mobile search words & extended mobile packages
As earlier communicated, revenues in the quarter negatively impacted by:
Weak development in Norway
Quarterly seasonality that hampers order intake and cash-flow
Multiscreen revenues set to come back to growth in Q4 2013
Adjusted EBITDA 2013 at least in line with last year. Reduction of cost base
in 2014 of SEK 100 M, generates restructuring costs in Q4 of SEK 35 M.
5
Strategic decisions taken
Print phased out in 2014 and (Eniro, Gule Sider, Krak and Panorama Firm)
becomes completely digital – focus & efficiency (Q2 last distribution Gula
Sidorna)
Print revenues 2014 from local books some SEK 250 M
Further actions to improve efficiency and time to market
Closing down of two offices in Voice business
Reduction of employees in Q4 is set to lower cost base 2014 by SEK
100 M
Restructuring cost in Q4 2013 expected to SEK 35 M
New long-term target for net debt/EBITDA – not to exceed 2 (earlier 2.5)
Long-term dividend policy:
At least 30% of net income when Net Debt/EBITDA<2.0
6
Mobile search revenues increased 82% organically
Mobile searches of total searches on products-, services and categories
continues to increase 33%
Multiscreen revenues were down organically 3% y/y (+5% excluding
Norway)
Multiscreen revenues increased to 79% (70) of total ad revenues
Total revenues were down 10% y/y
Organic decline 8% (-6% excluding Norway)
Cost reductions SEK 71 M in Q3
EBITDA was SEK 225 M (261)
EBITDA margin of 26.2%
Operating cash-flow was SEK -69 M (25), but in line with last year for 9M
Q3 key developments
7
Financial development Q3 2013
857
225 90
-69
2 519
-500
0
500
1 000
1 500
2 000
2 500
3 000
3 500
Revenues EBITDA Net Profit Operating CashFlow
Net Debt
SEKm
Q3 2012 Q3 2013
-10%
-12%
-14% +32% -94M
8
Revenue development per country
0
200
400
600
800
1 000
1 200
Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13
SEKm
Sweden Norway Denmark Finland Poland
9
Group revenues and EBITDA-margin
0%
5%
10%
15%
20%
25%
30%
0
200
400
600
800
1 000
1 200
Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13
SEKm
Revenues EBITDA-margin
10
Mobile – fastest growing search segment
Strong market position within mobile
advertising
Mobile revenues increased 79% to
SEK 68 M in Q3
Mobile search 8% of total revenues
in Q3
We expect mobile revenues to
double in 2013 to SEK 300 M (147)
Target of SEK 900 M in revenues in
2015
Growing traffic and database content
11
Traffic
There are 6,5 M unique users
(browsers) per week visiting Eniro
properties
Mobile search accounts for 33 percent
of total product and company searches
Database content
There are 2,2 M active searchable
companies in Eniro database
There are 11,500 registered web shops
690 000 web addresses
Our sales force, of some 1,500
employees, is an important source for
quality and accurate content
% Million
Traffic development, total and mobile
0
5
10
15
20
25
30
35
0
5
10
15
20
25
JAN-13 MAR-13 JUN-13 SEP-13
Total searches (company, maps, name & number) (M permonth)
Of which searches on mobile devices*
Share company, product searches on mobile (%)
* Mobile searches incl. mobile internet, apps and searches
from surfing on mobile devices (including tablets)
12
Positioned to growth
Total market value Sweden ~SEK 9bn 2013E
Total market growth Sweden 9% in 2013E
Market growth in the media segments Eniro is present in is estimated to 6-10 % 2013*
*Note: Estimated growth from IRM
113%
20% 9%
1% -1%
-40%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
140%
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
Mobile Searchwords
TotalInternet
Banners OnlineCatalogue
PrintedCatalogue
SEKm
Market value 2013E Growth (y/y) 2013E
Swedish relevant market value
13
Highlights Print phased out in 2014 and all core brands becomes digital
Reorganization to improve time-to-market, productivity and
cost
Financial targets
* mobile revenues of SEK 900 M in 2015
* net debt/EBITDA not to exceed 2 (former guidance 2.5)
* adjusted EBITDA for 2013 at least in line with 2012
Focus areas going forward
14
Continued focus on:
Product mix transition to support revenue growth
Cost efficiency
EBITDA and bottom-line profitability
Operating cash flow
Financial position
02 Mattias Lundqvist
CFO
Development Net debt / EBITDA
16
0
1
2
3
4
5
0
2 000
4 000
6 000
8 000
10 000
2006 2007 2008 2009 2010 2011 12 Q1 12 Q2 12 Q3 12 Q4 13 Q1 13 Q2
X SEK million
Net Debt EBITDA Net Debt/EBITDA
13 Q3
17
Revenue bridge Q3 2013
Adjusted Currency
effects
Reported
revenues
9M 2012
Divested
business
Voice Reported Organic
baseline
Acq. Desktop Moved
publications
Print Campaign Other
-3% -8% +1%
Divested operations, currency and moved publications gave a total effect on revenues of
SEK -24m in Q3 which equals an decrease of 1%
Ex. Eniro Norway total revenues declined -6%
29
47 27 31
850
924
7
-10%
-8%
7
857
9
7
948
7 10
Mobile
Total revenue development
Organic revenue development
18
Cost savings in Q3 2013
Total savings SEK 236m in 9M 2013, of which SEK 85 M in Q1, SEK 80 M in Q2,
and SEK 71 M in Q3
Savings include reductions in Staff of SEK 31 M, Print and Paper of SEK 6 M and
Consultants of SEK 12 M
2.150
2.300
2.250
0
1.950
2.000
2.100
2.050
2.200
30
1130
Divested
0
66
80
85
8
Organic
baseline
2.216
Net
Savings Q2
7
71
Net
Savings Q3
Net
Savings Q4
1.927
1.993
11
Operating
cost 9M
2012
2.163
2.257
Adj
Operating
cost 9M
2013
22
Net
Savings Q1
53
Currency
effect
2.257
2014-236
-223
Reported
cost 9M
2013
2.015
Acquired
22
Including acquisitionsCost ex 3rd party3’rd party cost
19
Change in Net debt
Operating cash flow in Q3 decreased to SEK -69 M (25)
Operating cash flow 9M 2013 SEK 122 M (138)
Net debt/ adjusted EBITDA 2.6 (2.9)
Analysis of interest bearing net debt
Q3 2013 Q3 2012 YTD 2013 YTD 2012 2012/13 FY 2012
SEK M Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
Opening balance -2 453 -2 887 -2 704 -3 535 -2 863 -3 535
Operating cash flow -69 25 122 138 283 299
Acquisitions and divestments -2 1 39 27 82 70
Share issue - -2 - 376 0 376
Translation difference and other changes 5 0 24 131 -21 86
Closing balance -2 519 -2 863 -2 519 -2 863 -2 519 -2 704
Net debt /adjusted EBITDA, times 2,6 2,9 2,6 2,9 2,6 2,8
20
Financial commentary
Amortizations
Re-classification of the Norwegian trademarks Gule Sider and Ditt Distrikt,
from indefinite to a limited time frame of 5-10 years.
Annual amortization of some SEK 95 M
Investments
Expectation of investments for full year 2013 approx. SEK 150 M
Cash-flow & Working capital
Slightly negative in 2013
Q3 seasonally weak due to summer vacations
Voice
Further efficiencies to partly compensate for Voice market decline
21
Outlook
Mobile revenues is expected to reach SEK 900 M in 2015
Adjusted EBITDA 2013 at least to be in line with 2012
Long-term Eniro expects to grow in line with the advertisement market
Long-term net debt/EBITDA not to exceed 2x
Positive cash flow from operations
Long term dividend policy: at least 30% of net income when
Net Debt/EBITDA<2.0
Investments in 2014 approx. SEK 150 M
ENIRO Q3 REPORT
Appendix
23
Financial commentary
Amortizations
Depreciable intangible assets that arose in connection with the acquisition of
Findexa
2005 was fully amortized by December 2012
Lowering amortizations by SEK 283m 2013 vs. 2012. Recognized in marketing
cost (reported Q3 marketing cost lowered y/y by SEK 37 M)
Taxes
Paid tax will be lower in H2 2013 since Eniro's tax payments primarily take
place in H1
24
Refinancing – terms and conditions
Loan facility
SEK 3bn, were of SEK 250 M in RCF
Three years with an extension to four years, on the condition that Eniro replaces
SEK 800 M of bank loan with a corporate bond
Amortizations
Bank loan expected to decrease with some SEK 375 M during 2013
Planned amortizations for 2014-2016 approx. SEK 375 M annually
Interest rates
Base rate Stibor plus 375bp (lowered to 300bp at Net debt/EBITDA below 2x)
Timing
Loan facility came into effect end of Q2 2013
•
25
Multiscreen – Q3
Total revenues decreased by 3%
Organic revenues decreased by
3%
0
100
200
300
400
500
600
700
Q1 Q2 Q3 Q4
SEKm Revenues - Multiscreen
2012 2013
-3%
26
Total revenues decreased by 9%
Organic revenues decreased by
6%
Local search – Q3
0
100
200
300
400
500
600
700
800
900
Q1 Q2 Q3 Q4
SEKm Revenues - Local Search
2012 2013
-9%
27
Voice – Q3
Total revenues decreased 12%
Organic revenues decreased 16%
EBITDA SEK 66 M (73)
EBITDA margin of 40% (39)
0
50
100
150
200
250
Q1 Q2 Q3 Q4
SEKm Revenues - Voice
2012 2013
-12%
28
Revenues Organic revenue by category
Q3 2013 Q3 2012 YTD 2013 YTD 2012 2012/13 FY 2012
% Jul-Sep Jul-Sep Jan-Sep Jan-Sep Oct-Sep Jan-Dec
Desktop search -10 -4 -5 -3 n.a. -3
Mobile search 82 171 94 128 n.a. 116
Campaign products 14 18 7 23 n.a. 26
Multiscreen revenues -3 2 2 3 n.a. 3
Print -20 -30 -31 -30 n.a. -33
Other products -28 16 -15 -1 n.a. -14
Local search -6 -6 -5 -7 n.a. -9
Voice -16 -17 -11 -15 n.a. -13
Total organic development -8 -8 -6 -8 n.a. -10
Revenues by country
Q3 2013 Q3 2012 YTD 2013 YTD 2012 2012/13 FY 2012
SEK M Jul-Sep Jul-Sep % Jan-Sep Jan-Sep % Oct-Sep Jan-Dec
Sweden 399 443 -10 1 236 1 366 -10 1 749 1 879
Norway 228 266 -14 742 870 -15 1 018 1 146
Denmark 133 134 -1 356 368 -3 513 525
Finland 50 61 -18 159 184 -14 224 249
Poland 47 44 7 143 120 19 223 200
Total revenues 857 948 -10 2 636 2 908 -9 3 727 3 999
29
EBITDA overview
EBITDA by revenue area
Q3 2013 Q3 2012
YTD
2013 YTD 2012 2012/13 FY 2012
SEK M Jul-Sep Jul-Sep % Jan-Sep Jan-Sep % Oct-Sep Jan-Dec
Local search 168 187 -10 475 531 -11 721 777
Voice 66 73 -10 196 196 0 279 279
Other -9 1 -42 -59 -63 -80
Total EBITDA 225 261 -14 629 668 -6 937 976
Items affecting comparability
Restructuring costs 16 12 42 29 61 48
Other items affecting
comparability 1 0 1 -4 -43 -48
Total adjusted EBITDA 242 273 -11 672 693 -3 955 976
30
Summary of Q3 2013
Highlights during the quarter
Mobile growth 82%
All core brands becomes digital (Eniro, Gule Sider, Krak, Panorama Firm)
Reorganization to improve efficiency and lower cost base
Focus areas/expectations going forward
Top-line growth
Cash-flow und profitability
Mobile first
Improved efficiency and fastened go-to-market delivery