Eniro - Year-end report 2010

Eniro - Year-end report 2010

 

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