Challenges and results 2007
Based on market and competitive conditions, financial targets and strategic choices, Eniro’s management every autumn identifies the most important challenges for the coming year. During 2007, the focus was on four core challenges for Eniro’s management and its employees.
1. Accelerated Internet growth
2. Increased revenues from directory assistance services
3. Reduce the decline in revenues from printed directories
4. Cost levels and Group synergies
1. Accelerated Internet growth
Challenge
The Internet advertising market and Internet usage continue to increase, as does the competition. Eniro’s companies in Norway, Finland, Denmark and Poland all reported high growth in Internet revenues, and the challenge for 2007 was to increase the growth rate for the Swedish company and to retain the same high revenue growth rate as in the other markets.
Actions
Early in the year, new versions of eniro.se, eniro.fi, eniro.dk, gulesider.no and kvasir.no were launched with a new design and improved functionality that included panorama images and video searches to meet users need and to increase Internet traffic. During 2007, the Swedish, Danish and Finnish organizations were divided into separate sales organizations, and there are now specialized Internet sales representatives in each market. In Sweden, a large number of Internet sales people were employed, and the range of Internet products in lower price categories was increased. During the period, Eniro made several acquisitions, of which the largest
was Kraks Forlag A/S, the leading local search company in Denmark. In addition,
Eniro acquired leta.se and 48 percent of bubblare.se. Eniro also signed a Nordic
agreement with Google relating to Eniro’s basic information. In Norway, Eniro reached
an agreement with Norsk Aller AS in the beginning
of the year to establish a jointly owned company to operate the Norwegian Internet portal sol.no. In addition to developing new functions and improving the functionality of Eniro’s Internet services, great effort was devoted continuously to develop new customer offerings containing transaction-based payment models. These offerings make it possible to participate actively in the fastestgrowing market segment, which is the market for sponsored links.
Results
The new versions of eniro.se, eniro.fi, eniro. dk, gulesider.no and kvasir.no resulted in increased traffic, and during 2007 a record high number of searches were made in Eniro’s Internet network. The organizational division with specialized sales forces resulted in an increased focus on sales in which the sales representative is closer to the customer. In Sweden, order bookings in the Swedish Internet market increased, in part as a result of the expanded sales force’s success in penetrating the market in combination with the expanded product offering. The acquisition of Krak in Denmark resulted in a leading Internet position in Denmark and strengthened
Eniro’s position as the leading search company in the Nordic region. Eniro now has very strong Internet positions in all markets. The partnership with Google increases
value for Eniro’s advertisers, while the acquisition of leta.se and part of bubblare.se
strengthened Eniro’s Internet network. Internet revenues in Sweden increased
organically by 14 percent (13), and in Norway the organic growth was 20 percent (23)
in 2007. The total Internet revenues increased organically by 16 percent (14) during
the year.
2. Increased revenues from directory assistance services
Challenge
The ambition for 2007 was to increase revenues from the directory assistance services in Sweden, Norway and Finland despite the fact that competition in the market is increasing and the number of calls from fixed telephones is declining, while the number of calls from mobile phones is increasing.
Actions
During 2007, Eniro’s directory assistance service was further enhanced and now offers a significantly broader service. From previously only offering traditional directory assistance services, Eniro now provides personal search services that include driving directions and web searches.
Results
The trend is that directory assistance services are improving into a more complete
search service. Calls are longer, and customers are more satisfied. Directory assistance services remain stable. Revenues in Finland increased to SEK 220 M (208) as a result of increased market share and increased price. In December the price was also raised in Norway which resulted in an organic revenue increase of 9 percent for the full year. The Swedish development was an organic growth of 1 percent while the Group revenues from the directory assistance services organically increased by 3 percent during 2007.
3. Reduce the decline in revenues from printed directories
Challenge
The ambition for 2007 was to reduce and preferably stabilize the revenue decline for
printed directories for which a decline of 5 percent was noted during 2006. At the
beginning of the year, Denmark and Poland had already stabilized revenues from printed directories, and as a result of new initiatives in Sweden and Finland, the decline in revenues from printed directories had slowed. Norway was the market in which Eniro faced the greatest challenge in 2007. Prior to 2007, an organic decline in revenues of 10 percent was expected for Norwegian print directories, and Swedish print directories were expected to decline organically by 2 percent. These expectations were revised during the year to an expected organic decline of 15 percent in Norway, while Swedish revenues for printed directories were expected to improve and to be organically unchanged, compared with 2006.
Actions
To stabilize revenues and reduce the decline in revenues from directories, it is necessary to work continuously with product development, to increase communication with advertisers and users and to enhance the sales force. Work with product development and innovation is being performed continuously and aimed primarily at improving usability for users and effectiveness for advertisers. The
2007 edition of Gula Sidorna featured a new layout, improved index and search pages and a new health and medical care guide that further simplifies searches for users. The pocket edition, Gula Sidorna – På väg that had already been distributed in Stockholm was during 2007 also launched in Malmö and Göteborg. In Norway, the Oslo directory was divided into two section, and a section with public information was also included in Gule Sider as of the 2007 edition. Work to communicate and demonstrate the value of advertising continued in all markets during the year, and Eniro’s offering to customers included call metering in which a unique telephone number is included in the customer’s directory advertisement that makes it easy to measure how many calls the ad generates and thus demonstrate the actual value of the advertisement. Implementation of Eniro’s sales concept continued in all countries, and in Sweden, a differentiated price structure was introduced for basic information.
Results
Eniro’s product development in combination with the sales force’s efforts were positively received by customers and users. Revenues from printed directories were stabilized in all markets except Norway, where conditions remain challenging and are being negatively affected by an intensive environmental debate. The Group’s total revenues from printed directories declined organically by 6 percent during the year, with Norway accounting for an organic decline of 15 percent.
4. Cost levels and Group synergies
Challenge
Synergies within the Eniro Group are currently generated primarily in purchasing,
product development and IT through common platforms that can be used in several
of the Nordic countries. The Group’s costs can be reduced, and the assessment is that there are opportunities to realize additional synergies.
Actions
During 2004, a cost-savings program was initiated to reduce Eniro’s costs by a total of SEK 300 M. SEK 100 M was realized in 2005, an additional SEK 100 M in 2006 and
yet another SEK 100 M in 2007. During the third quarter, the integration process for
Krak was completed, and the acquisition of Krak is expected to generate about SEK 60 M annually in cost synergies in Denmark starting in 2008. Work to increase the efficiency of operations is ongoing, and a number of Swedish functions were transferred to the Polish subsidiary during 2007.
Results
The two Danish organizations are now fully integrated, and the target for cost synergies of SEK 60 M annually starting in 2008 is retained. The cost-saving program that was initiated in 2004 was completed in 2007, and the established target of SEK 300 M (accumulated) was achieved. The cost savings from transferring certain functions from Sweden and possibly other countries to Poland had a positive effect on total costs.
Last updated: 2008-05-16