Year-end report 2008
CEO Jesper Kärrbrink's comments on the Year-end report 2008
2008 - A year of transformation in a tough economic environment
Strategy – an eventful year
Eniro has a solid foundation and a great position to build on even if the end of 2008 and the fourth quarter in particular have been eventful. When I started as CEO in May, I was humble before the task, but excited at the tremendously interesting challenge. In one of the worst financial crises ever, we have launched a new transformation strategy going from print dependency to online opportunities, from a holding structure to a Group structure to find synergies and cost savings – all to create long-term growth.
In 2008, the Group online revenues grew organically by 13 percent, amounting to almost 43 percent of the combined online and offline revenues. Eniro is by that one of the leaders in the industry in terms of migration of the business to online services. But to succeed with our strategy, new online initiatives and investments are essential. Since December, the new Online organization is up and running at full speed and five online development projects have been initiated to strengthen our customer proposition. We will mainly focus our efforts on the core offerings within local search but also within the Business Facilitating Services area. However, due to better visibility of our projects we have lowered our online investments estimates for 2009 - from up to SEK 250 M to approximately SEK 180 M.
Operations 2008 – Eniro’s core business is solid
Our core directory business in Q4 has performed in accordance with plan and the websites eniro.se, gulesider.no and eniro.fi all showed record high traffic in December. However, banner sales and other none core directory products developed slower than planned and sales in Finland was weaker than expectations. This caused a downward revision of the market outlook for the full year 2008. Operational EBITDA for the full year amounted to SEK 2,037 M.
As part of the new strategy and new organization, areas for potential synergies and increased efficiency have been identified. An overall review of the Group’s cost structure was initiated at the end of the fourth quarter starting in Finland where the new management team has implemented organizational changes to improve efficiency. Also in Denmark actions have been taken resulting in redundancies of approximately 40 employees. The Group-wide review will be completed by the end of June and will result in substantial cost savings over the coming three years.
Funding
In order to prepare for the more uncertain macro-economic environment and to get room for implementing new initiatives and cost savings, we intend to amend our bank agreement and therefore we have initiated bank negotiations aiming to achieve increased financial flexibility.
Dividend proposal
The revised dividend policy states that up to 50 percent of the year’s net income may be distributed to shareholders. The Board of Directors will propose no dividend for 2008 as a consequence of the negative full year net income followed write-downs and the financial target of a lower net debt.
Market outlook
We have said earlier that Eniro is more resilient to the downturn than many other companies, but will not be immune. However, Eniro’s business model gives a good visibility for the first half of 2009. At the beginning of 2009, more than 50 percent of the annual revenues in Sweden and over 40 percent of the annual revenues in Norway had already been sold.
In the current environment we see no reason for changing our financial targets for the medium term (2009-2011) of an online growth of 12-15 percent per year resulting in a top line growth of 0-2 percent per year, and an EBITDA-margin of around 27 percent.
In 2008, we have shown that Eniro is a solid company with great people, who have done a terrific work during the year. For 2009, we will continue to focus on develop and improve our core business, implement synergies and achieve cost savings and continue our strong offline to online transformation. I am still humble before the task – but also very proud over what we have accomplished so far and I am tremendously excited to take the next step to transform Eniro.
Jesper Kärrbrink
President and CEO
Last updated:2009-02-18