NHST Media Group - Quarterly Report 1st quarter 2020

The corona outbreak (covid-19) had negative consequences for the NHST Media Group in the first quarter, as for many other businesses in Norway and around the world. The Group’s publications experienced a strong growth in the demand for news and commentaries, resulting in increased traffic on the publications’ websites and increased sale of digital subscriptions. At the same time, advertising income and revenues from sales of other commercial services declined significantly. Also, for the Norwegian publications and for several of the Group’s global publications, the drop in oil price negatively affected the market development.

In March, the Group implemented a large number of efforts to limit the spread of the corona virus. Strong and consistent efforts by managers and employees made it possible to publish the publications without interruptions, both on paper and online.

- I am very pleased with our organisation’s ability to deliver high-quality journalism and important products, despite demanding working conditions and market developments. The health and safety of our employees will always be our highest priority. We acted promptly, and initiated efforts to protect both our employees and customers. Revenues and results developed positively in January and February, but in the last month of the quarter, we experienced a significant reduction in revenues. Our sales in Asia were hit even earlier. All the units in the Group have implemented measures to cut cost. Total cost reductions amount to more than NOK 100 million this year. This will help us through this crisis situation, so that we can continue the development of our businesses, says Hege Yli Melhus Ask, CEO of NHST Media Group.

The Group’s operating revenues amounted to NOK 281.2 million for the first quarter, down 3.5 per cent compared to the first quarter of 2019. The reduction is mainly explained by the lower advertising income, which was down by NOK 10 million. The operating profit before depreciation and amortisation (EBITDA) amounted to NOK 3.6 million, up from a negative EBITDA of minus NOK 6.5 million for the first quarter last year. The improvement was due to lower personnel cost and reduction in purchased services.

In March and April, the board of directors of the NHST Group approved comprehensive measures to reduce cost and improve the financial position of the operations. The measures will result in cost reductions amounting to more than NOK 100 million, with effect from the second quarter this year, and include reductions in personnel cost through voluntary salary cuts and temporary layoffs, in addition to reduced purchase of services and other administrative costs. In Mention, a manning reduction will be implemented as a result of the corona pandemic.

Changes in the market outlook as a result of the covid-19 pandemic, have resulted in a write-down of goodwill related to the acquisition of Mention (booked in 2018) of NOK 80.6 million in the first quarter. The Group remains confident in Mention’s long-term competitiveness and income potential.

The operating loss (EBIT) for the NHST Group, including the write-down of goodwill (EBIT), amounted to NOK -94.1 million for the first quarter, compared to NOK -23.1 million for the first quarter last year. The result before taxes was NOK -83.5 million. Despite a difficult financial situation due to covid-19 and the oil price decline, leading to a negative result for the quarter, the board is of the opinion that the fair value of the Group`s assets clearly exceeds the liabilities.