Q2 2007
Tomas Franzén’s comments on the Interim report January - June 2007.
Our ambition for revenue growth in a mid term perspective is 3-5 percent with accelerating growth in online revenues, increased revenues from voice and reduced decline from print.
In order to meet the ambition we started out the first quarter quite aggressively with launches of new versions of our websites in all countries, an organizational split of our online and print business in Sweden and increased our sales forces in most markets.
These actions were followed in the second quarter by especially two events within online.
Firstly, we acquired Krak, the leading online directory company in Denmark, which will enable us to take a leading online position in Denmark. This acquisition will further strengthen our position as the leading search company in the Nordic countries and gives us very strong online positions in Sweden, Norway, and Denmark and a good position in Finland.
The first findings on Krak are very positive and by a quick restructuring, resulting in redundancies of approximately 150 people, our new Danish organization will be in place already by September 1. The earlier communicated synergies in 2008 of 25 MSEK will instead be 60 MSEK annually. To accomplish this we will in the third quarter report a restructuring cost of approximately 40 MSEK.
Secondly, we made an additional agreement with Google. Google is now using our listing information in their service “Google maps” in all Nordic countries, which means additional exposure for our advertisers.
The enlargement of our sales force, which we started during the first quarter, continued during the second quarter. Adding more sales is a strategic move in order to improve the market penetration, especially within online, and a necessary step towards reaching our overall ambition for revenue growth. The enlargement is affecting EBITDA negatively in the first two quarters but growing order intake will result in increased top line growth during the second half of the year.
During the second quarter we have also been busy working with the divestiture of WLW – the process is ongoing and we expect the divestment to be closed late summer.
Looking at the group revenues development, total revenues were organically flat for the second quarter and increased organically by 1 percent for the six-month period. We continue to show strong organic growth in online with a 17 percent growth in the second quarter, which is also the accumulated figure for the first six months. We expect this strong development to continue also in the second half of the year as a result of taken initiatives within online.
Voice also continue to grow in line with our expectations and recorded a 5 percent organic growth during the first half-year as a result of the new service concept within voice.
The print revenues declined organically by 7 percent in the second quarter and by 8 percent for the six months period. Our two biggest print markets, Sweden and Norway, are developing in different directions. While Sweden is improving order intake during the first half year and will show flat print revenues for the full year compared with last year, the organic print decline in Norway for the full year will be 15 percent. The print development in Norway is of course not satisfactory. The print activities initiated in Norway during the first quarter within sales force management and product development for the 2008 editions have been concluded during the second quarter and it is yet to early to evaluate the impact from these activities going forward in 2008.
EBITDA for the Group decreased to SEK 537 M (663) for the second quarter. Changes in publication dates, currency and bundling principles as well as capital gains in the second quarter 2006 and the loss of publication fees impacted the comparison negatively. Considering the impact of these factors the operational EBITDA is in line with the same quarter last year.
Finally, we have adjusted our market outlook for the full year taking into account the acquisition of Krak and the print development in Sweden and Norway. Although there are some changes in our revenue guidance the operational EBITDA guidance for the full year is unchanged.
Tomas Franzén
President and CEO
Last updated: 2007-10-24