Norwegian publisher Schibsted says its first-quarter core earnings were above expectations, reporting a forecast of annual revenue growth of between 15 and 20 per cent in online classifieds for the mid to long-term to offset the tough media house market.
Schibsted's first-quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) rose to 421 million Norwegian crowns (NOK) from 376 million crowns a year ago, versus expectations for 389 million crowns.
Profit before tax was NOK 219 million, down from NOK 846 million in Q1 2015. Q1 2015 included gains of 740 million (compared to 24 in Q1 2016) resulting in an improved free cash flow overall.
The company which released its Q1 2016 results this week reported the following highlights:
The company says continued investments in product and technology are providing a future operational growth lever.
However the market environment is increasingly difficult for media houses with comprehensive cost measures being implemented.
Despite this the company reports a significant uptake of digital newspaper subscriptions and a growth in Media House Sweden's online revenues of 11 per cent in Q1.
In addition there is an increased uncertainty around the acquisition of Hemnet. Schibsted expects a discussion with the Swedish Competition Authority regarding potential commercially viable remedies.
Schibsted CEO Rolv Erik Ryssdal says strong traffic positions in France and Spain make it possible to grow revenues both by introducing new services and through price optimization in the verticals."
"We continue to invest substantially in organic development of our online classifieds operations.
"It is great to see firm evidence of return on investments for example through the strong growth in traffic and engagement in an important market like Brazil," he says.
"We are also building a strong position in Mexico, where our site Segundamano.mx is the leader in terms of traffic and engagement."
In selected European markets, Ryssdal says investments in the native mobile market place Shpock continues.
"The service develops very well in significant markets like UK and Germany.
"The changes in consumer and advertiser behaviour continue to affect our media houses in Norway and Sweden.
"A positive sign is the newspapers' number of digital subscribers. Premium journalistic content presented in a modern way across platforms appeals to a large number of consumers.
"However, the advertising markets particularly in Norway are tough, and we need to constantly adapt our cost base to the reduced revenues," Ryssdal says.
"We have launched several new products, including geographical ad targeting in Norway. Our roadmap for new products is ambitious going forward, so we can continue to deliver improved products for consumers within both online classifieds and media houses."