Press release 30 April 2012
DNA’s net sales grew, EBITDA weakened by increase in fixed costs
SUMMARY
- Net sales increased to EUR 186.6 million (173.2 million) year-on-year. This growth was fuelled in particular by terminal device sales.
- EBITDA decreased to EUR 38.6 million (49.8 million), or 20.7 per cent of net sales. The decline was due to higher network, service, personnel and marketing costs, and a EUR 3.2 million provision recognised in the period due to cooperation negotiations. The result of the comparable period was improved by a release of provision consisting of lower than expected integration costs.
- Depreciation amounted to EUR 31.2 million (35.5 million), and operating profit fell to EUR 7.4 million (14.3 million), or 4.0 per cent of net sales.
- DNA and its main shareholders bought a total of 2,027,167 DNA Ltd shares from Sanoma.
- On 30 March 2012, DNA announced that it will start cooperation negotiations due to restructuring of operations.
- The mobile communication subscription base grew year-on-year to 2,329,000 in total (2,112,000).
- Revenue per user (ARPU) for mobile communications amounted to EUR 20.0 (20.5).
- Mobile communication subscription turnover rate (CHURN) was 15.8 per cent (19.1 per cent).
- Due to the fall in the number of telephone subscriptions, DNA’s fixed-line subscription base fell to 1,024,000 (1,051,000) subscriptions (telephone, broadband and cable television).
- DNA’s outlook for 2012 has been revised. The Group’s financial position is estimated to remain good in 2012, and net sales are expected to grow. EBITDA (in euros) and operating profit are estimated to be lower than in 2011 (previously: EBITDA at a similar level, operating profit lower due to an increase in depreciation), however the goal of the restructuring of operations is to improve these figures already towards the end of the review year.
Key figures
Figures are unaudited.
|
EUR million
|
1-3/2012
|
1-3/2011
|
Change, %
|
|
Net sales
|
186.6
|
173.2
|
7.7
|
|
EBITDA
|
38.6*
|
49.8
|
-22.6
|
|
- % of net sales
|
20.7*
|
28.8
|
|
|
Depreciation
|
31.2
|
35.5
|
-12.2
|
|
Operating profit
|
7.4*
|
14.3
|
-48.3
|
|
- % of net sales
|
4.0*
|
8.3
|
|
|
Profit before tax
|
5.7*
|
13.4
|
-57.2
|
|
Profit for the financial period
|
4.3*
|
9.8
|
-56.8
|
|
Return on investment (ROI), %**
|
3.9*
|
7.8
|
|
|
Return on equity (ROE), %**
|
3.0*
|
6.4
|
|
|
Investments
|
23.4
|
18.0
|
30.0
|
|
Cash flow after investments***
|
-8.9
|
25.9
|
-134.4
|
|
|
31 March 2012
|
31 March 2011
|
|
|
Net debt, EUR million
|
288.6
|
128.7
|
125.1
|
|
Net debt/EBITDA
|
1.87
|
0.65
|
187.7
|
|
Gearing, %
|
58.0
|
21.5
|
|
|
Equity ratio, %
|
51.7
|
65.2
|
|
|
Personnel at the end of period
|
1,045
|
982
|
6.4
|
*includes a EUR 3.2 million provision due to cooperation negotiations
**12-month average
***includes business combinations and financial lease agreements
CEO’s review:
DNA’s structure is renewed to increase competitiveness
DNA's net sales for January-March increased to EUR 186.6 million (173.2 million). This growth was fuelled in particular by terminal device sales. As regards subscriptions and traffic, net sales growth was restrained by price erosion and the reduction in mobile network termination charges. EBITDA decreased to EUR 38.6 million (49.8 million) due to higher network, service, personnel and marketing costs. The result was also weakened by a non-recurring EUR 3.2 million provision due to cooperation negotiations. Depreciation remained at a high level, and operating profit decreased to EUR 7.4 million (14.3 million). Mobile communication subscription turnover rate (CHURN) improved and came to 15.8 per cent (19.1 per cent). Our financial position remained good, and gearing increased due to the acquisition of own shares.
At the end of March, we announced that we will renew our business structure and initiate cooperation negotiations. Despite opposite estimates, the growth of net sales from traffic and subscriptions slowed down, and we reacted quickly to improve our future financial performance. Our goal is to streamline the organisation and improve the speed, efficiency and profitability of our operations.
The enhancement of our operations and competitiveness takes place in an environment that is undergoing a major change. Changes are fuelled by global web and application-based business models, driven by growing number of smart phones, rapidly increasing traffic volumes that require additional technology investments and increase the cost of operations as well as increasing regulation. Good financial performance in such an environment requires increased focus. We seek to maintain our competitiveness by streamlining and increasing cost-efficiency.
We launched our terrestrial TV business last autumn, entering a changing market. One competitor has since exited due to financing problems, leaving two pay-TV operators on the market. As a result, our terrestrial network is obtaining new programme content, which strengthens our offering. This change supports our position as a nationwide pay-TV operator.
During the review period, the Finnish Government decided to auction the 800 MHz frequencies for mobile communication. The goal of the Ministry of Transport and Communications is to execute the auction early next year. This year, the most significant changes include increasing product packaging in all DNA’s markets and intensifying competition over housing company subscriptions in the fixed network. The decision on prohibiting consumer telemarketing of mobile phone subscriptions is expected during this spring. The possible ban would affect the structure of sales in the market.
Riitta Tiuraniemi
Additional information:
Riitta Tiuraniemi, President and CEO, tel. +358 44 044 1000, riitta.tiuraniemi@dna.fi
Ilkka Pitkänen, CFO, tel. +358 44 044 4001, ilkka.pitkanen@dna.fi
Distribution:
Key media
www.dna.fi
DNA's interim report January-March 2012 (online report)