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Eniro – Year-end report 2010

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Developments in the fourth quarter

  • Operating revenues amounted to SEK 1,482 M (1,966), an organic decline of 19 percent
  • EBITDA amounted to SEK 409 M (557)
  • Net income for the period amounted to SEK 148 M (182), including reversal of reserves related to tax expenses in Norway and one-off refinancing costs
  • A rights issue amounting to approximately SEK 2.4 bn after transaction costs was implemented
  • New loan agreements regarding financing through to the end of 2014

Developments in 2010

  • Operating revenues amounted to SEK 5,326 M (6,581), corresponding to an organic decline of 14 percent, which is in line with guidance to the stock market
  • EBITDA amounted to SEK 605 M (1,807), affected negatively by one-off effects of SEK -626 M as a result of divesting and restructuring operations in Finland
  • Net income was SEK -4,620 M (608), affected negatively by the impairment of intangible assets amounting to SEK -4,261 M, attributable mainly to the Norwegian operations
  • Operating cash flow amounted to SEK 151 M (1,153), including negative one-off effects related to the refinancing of SEK 256 M
  • Net debt at December 31, 2010 was SEK 3,951 M (6,645)
  • The Board of Directors will propose no dividend for 2010
  •  Unchanged forecast: For 2011, a single-digit organic revenue decline is expected. A turn around to organic revenue growth is expected in 2012.

Table included in attached PDF file

Johan Lindgren, President and CEO of Eniro, commented

2010 was a difficult year for Eniro. Operating revenues declined organically by 14 percent, which matched our forecast, but was nonetheless the worst performance ever for Eniro over a 12-month period. The revenue decline was due to the transformation from print to online, where the change rate has been too low, which has led to weak sales efficiency. The merger of the sales forces at the beginning of the year resulted in a loss of pace in Swedish sales, which resulted in a substantial drop in revenues during the second half of the year.

The revenue decline was offset partially by cost reductions, which for the full year amounted to SEK 435 M, exceeding our expectations. Work is under way to align the number of employees and consultants to the scope of operations and the pace of product development activities has been dampened. EBITDA was weak for the year due to lower revenues and the negative one-off effects of divestment and restructuring of the Finnish operations.

The rate of activity in the company was high during the fourth quarter. To resolve long-term financing issues, a rights issue amounting to approximately SEK 2.5 bn was carried out, in which existing shareholders and external guarantors participated. We view it as positive that the guarantee consortium comprising the company’s banks did not need to participate in the issue. The issue amount is being used to reduce net debt and we have loan agreements that secure the company’s financing through the end of 2014. Concurrently, a review of the organization was carried out to increase the focus on sales with stated revenues responsibilities, to enhance the efficiency of product development and the delivery organization and to supplement the finance function.

With around 40 percent of the revenues for 2011 sold during  the preceding year, we are now focusing all efforts on reversing the negative revenue trend. We are working to improve sales efficiency and will also increase the product offering. New versions of eniro.se and gulesider.no featuring product search functionality to facilitate a broader customer offering and new advertising formats began to be marketed and sold in January 2011. Since the launch, the use of our new services has increased sharply, both on the Internet and via mobiles.

Through its unique database, diversified customer base, large sales force and user-friendly search functions, Eniro is well positioned to capitalize on opportunities in the growing search market. Sales starts for the new search services in Sweden and Norway have been problem-free and we have experienced a favorable customer response. Based on the positive sales starts, we have noted a leveling-off of the negative order trend, indicating that the actions we are now implementing will gain effect in the form of a single-digit rate of decline in revenues during the second half of the year.

Eniro’s outlook remains unchanged. For 2011, a single-digit organic revenue decline is expected. A turn around to organic revenue growth is expected in 2012.

For 2011, we have identified potentials for continued cost alignments. The total cost reduction during 2011 is expected to be SEK 200 M below the cost base in 2010, excluding the effects of divestment and restructuring of operations in Finland. The cost base is estimated to be reduced by an additional SEK 200 M during 2012.

Johan Lindgren,
President and CEO

 

For further information, please contact:  

Johan Lindgren, President and CEO
Tel: +46 8-553 310 01

Mattias Lundqvist, Acting CFO
Tel: +46 70-555 14 90 

Lena Schattauer, Acting Head of IR
Tel: +46 70-595 51 00  

Eniro is the Nordic region’s largest search company. Both consumers and companies can use Eniro’s services to easily locate where to buy services and products – regardless of whether the channel is internet, catalog or mobile. Advertisers can actively market themselves to interested consumers, find new customers and increase sales. Better search means better business.

Eniro has 4,400 employees in the Nordic region and Poland and has been listed on Nasdaq OMX Stockholm since 2000. Headquarters are located in Stockholm, Sweden. More on Eniro at www.eniro.com.

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