Vend Marketplaces (VEND) Q4 2011 (Q&A) earnings summary

Executive summary

• 2011 operating revenues rose 4% to NOK 14,378m; underlying growth was 6%, driven by online classifieds and digital advertising. EBITDA was NOK 2,185m, slightly below NOK 2,199m.

• Digital sources generated more than one-third of revenue; classified marketplaces expanded while print circulation declined and economic uncertainty weighed on advertising.

Financial highlights

• Operating profit was NOK 1,439m vs. NOK 3,410m; 2010 included a NOK 1,518m gain from remeasuring the previously held Leboncoin interest.

• Net income was NOK 832m vs. NOK 2,931m; EPS was NOK 7.00 and adjusted EPS NOK 8.76, compared with NOK 27.04 and NOK 9.72 in 2010.

• Operating expenses increased 7% on an underlying basis; excluding NOK 412m of classified-market launch costs, underlying cost growth was below 5%.

• Operating cash flow was NOK 1,616m vs. NOK 1,941m, mainly reflecting higher taxes paid and working-capital changes.

Outlook and guidance

• Online classifieds expected to sustain strong growth and high margins; expansion into new markets was planned to continue at a high pace in 2012.

• Classified-market launch investment charged to EBITDA may be at the same or a slightly higher level in 2012 than in 2011; Subito and Willhaben were expected to contribute positively to 2012 profitability.

• Scandinavian newspaper cost reductions of NOK 190–210m are planned for 2012–2014, with most impact in 2012; expected workforce reduction is 160–200.

• Continued mobile growth, digital paid-content development, consumer-service investment and subscription and single-copy price increases were expected in 2012.