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1 January – December 2006 Observer AB. 2 Highlights January - December 2006 Revenue up 8 % and EBIT* up 16 % Strong growth in integrated services driven.

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Presentation on theme: "1 January – December 2006 Observer AB. 2 Highlights January - December 2006 Revenue up 8 % and EBIT* up 16 % Strong growth in integrated services driven."— Presentation transcript:

1 1 January – December 2006 Observer AB

2 2 Highlights January - December 2006 Revenue up 8 % and EBIT* up 16 % Strong growth in integrated services driven by evaluation services Growth in international client segment Restructurings in the Nordic & Baltic region proceed according to plan Further restructurings in the UK initiated Positive development in the US, Canada, Germany and Portugal A company for mediating digital information established in January * Excluding write-down goodwill and restructuring expenses January - December

3 3 Market Expected global market growth: 5-7% Generally good market conditions New media and channels create opportunities for service development –Crises management through blog monitoring –New channels, primarily within broadcast monitoring Growing importance of reputation and brands drive demand Rising demand for integrated services with value-added analyzed information Growing demand within international client segment Copy right issues change market prerequisites Tough competition in all service areas Consolidation will continue and increase, mainly driven by technological shift (digitalization), internationalization of industry and lack of critical mass amongst regional competitors. January - December

4 4 January – December 2006 Amounts in SEK millionJanuary – December Revenue1 915 (1 776) Organic growth4 % (2) EBIT- 612 (175) EBIT excl. write-down goodwill and restructuring expenses 204 (175) Operating margin excl. write-down goodwill and restructuring expenses 11 % (10) Operating cash flow178 (163) January - December

5 5 October – December 2006 Amounts in SEK millionOctober - December Revenue487 (489) Organic growth4 % (2) EBIT- 281 (44) EBIT excl. write-down goodwill and restructuring expenses 32 (44) Operating margin excl. write-down goodwill and restructuring expenses 7 % (9) Operating cash flow22 (73) January - December Nonrecurring expenses of SEK 21 million in the UK during Q4 Restructuring expenses of SEK 23 million during Q4 Weak development in Anglo Europe

6 6 Organic Growth & Operating Margin* (rolling 12 months) * Excluding write-down goodwill and restructuring expenses January - December

7 7 Operating Cash Flow and EBIT * (rolling 12 months) * EBIT before write down of goodwill and restructuring costs Amounts in SEK million January - December

8 8 Balance Sheet December 31, 2006 Working capital: -81 Equity / Assets ratio: 45 % Debt / Equity ratio: 61 % Net debt: 764 Financial liabilities 904 Operating liabilities 454 Equity Financial Assets, 140 Current receivables, 373 Other fixed assets, 274 Goodwill Amounts in SEK million January - September

9 9 The Regions North America Improved earnings Organic growth amounted to 7 % (Q4: 7 %) Healthy demand for integrated services Strong market for broadcast monitoring Nordic & Baltic Improved but still weak earnings Digitalization will reduce costs Organic growth amounted to 5 % (Q4: 6 %) Strong double digit growth in evaluation services Positive development in the international client segment Rest of Europe Lower earnings Organic growth amounted to -1 % (Q4: -2 %) Positive development in Germany and Portugal Weak development in UK and Ireland January - December

10 10 Changes and development Revised strategy and new financial targets Digitalization of client offering and production processes Strategic approach through establishment of new company Strategic repositioning for increased efficiency and profitability: Uniform profile and service offering Common solutions and tools for the European market International client offering and processes Strategic sourcing Expansion in geographic markets with high shareholder ROI Restructuring - estimated savings: SEK million, costs: SEK million January - December

11 11 Savings measures 2006 Reduction of the Head Office organization A common functional Nordic organization implemented –New Regional Director appointed February Centralization of Nordic digital production One of two production sites in Norway shut down The Estonian operations sold; operations in Latvia discontinued –Operations in the Baltic countries concentrated in Lithuania. New management in the UK Irish operations shut down One of three production sites in the UK shut down January - December

12 12 Further savings measures Estimated savings: SEK 70 million; costs: SEK 50 million Coordination of business processes Changeover to a digital client offering based on a digital production process Uniform profile and offering in Europe The previous and current action programs are expected to lead to yearly savings of SEK 200 million with a full effect by Restructuring expenses are expected to total SEK 170 million. The impact on earnings based on the 2006 expense level and exchange rates is estimated as follows: Estimates of aggregate effects are preliminary and could be affected by outside circumstances, which could result in eventual changes in the time schedule. January - December Mkr Savings impact Restructuring expenses576350–

13 13 Observer today Strengths Global market leader Unparalleled offering – breadth and depth Large client base Prime position in North America – the leading media market in the world Strong cash flow Opportunities Strong growth in international client segment Strong position within our client segment Effects from initiated cost reduction program Increased synergies within and between regions Expansions to new markets Observer is well positioned to capitalize on a growing market. January - December

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