Vend Marketplaces (VEND) Q4 2013 earnings summary

Executive summary

• 2013 operating revenue was NOK 15,232 million, up 3% reported and 2% underlying; digital businesses generated 47% of revenue, versus 40% in 2012.

• Established classifieds and media-house results were solid, while increased investment in new classifieds markets reduced reported EBITDA; adjusted for investment-phase classifieds, EBITDA rose to NOK 2,672 million from NOK 2,573 million.

• Digital transformation remained the strategic priority, with high classifieds investment and continued spending on digital media products, technology and data analytics.

Financial highlights

• Revenue was NOK 15,232 million versus NOK 14,763 million; EBITDA was NOK 1,672 million versus NOK 2,043 million, including NOK 1,000 million of investment-phase classifieds losses.

• Operating profit reached NOK 2,201 million versus NOK 729 million; profit before tax was NOK 2,015 million versus NOK 620 million, helped by net other income and expenses of NOK 1,169 million.

• Net profit was NOK 1,562 million and profit attributable to owners was NOK 1,536 million; EPS was NOK 14.32, while adjusted EPS was NOK 3.90.

• Operating cash flow declined to NOK 635 million from NOK 1,275 million, reflecting lower profit before tax adjusted for other items and less favorable working-capital development.

Outlook and guidance

• Established classifieds sites were expected to sustain revenue growth and good margins; new-market investment was expected to remain relatively high in 2014.

• Finn’s move to a freemium model for some private listings could reduce 2014 revenue by NOK 40 million; a weaker Norwegian economy could pressure recruitment advertising.

• 2014 digital competence and technology investment was expected to reduce EBITDA by NOK 100–150 million; web TV efforts were expected to have a negative EBITDA effect of NOK 50 million.

• Structural change and digital transformation were expected to keep media-house margins softer; weaker Norwegian macro conditions were expected to further pressure print advertising, especially recruitment.