• Sales up 15.0% in first nine months to EUR 1,409.0 million
• EBITDA stable at prior-year level despite strong increase in expenditure

Montabaur, November 10, 2010. The Management Board of United Internet AG (ISIN DE0005089031) today announced the consolidated results according to IFRS for the first nine months of 2010.

Group development
In the first nine months of 2010, consolidated sales of United Internet AG grew by 15.0% from EUR 1,224.8 million last year to EUR 1,409.0 million. Despite expenditure for the current DSL quality drive and high start-up costs for new business fields - now totaling EUR 58.3 million - there was a slight year-on-year increase in earnings before interest, taxes, depreciation and amortization (EBITDA) to EUR 270.8 million (prior year: EUR 269.1 million - without special items of EUR 50.2 million from the sale of shares). Due in particular to scheduled depreciation of EUR 16.2 million on freenet's DSL customer base acquired in late 2009, earnings before interest and taxes (EBIT) fell as expected by 8.3% to EUR 210.6 million (prior year: EUR 229.6 million). Earnings per share (EPS) fell accordingly from EUR 0.57 (comparable prior-year figure) to EUR 0.53. Operative cash flow rose by 7.6% from EUR 193.8 million last year to EUR 208.5 million.

In the third quarter, sales were up 16.9% on the previous year to EUR 478.2 million (prior year: EUR 409.1 million). In this quarter, United Internet made a further significant increase in expenditure for the establishment and development of new business fields - especially for the marketing of new Mobile Internet products and the Do-it-Yourself Homepage. With total expenditure of EUR 39.1 million, the company invested more than twice as much as in the first two quarters together (EUR 8.7 million in Q1 and EUR 10.5 million in Q2). At the same time, negotiations concerning pre-service invoices which had been queried were successfully concluded. The resulting reimbursements for previous periods totaling EUR 19.3 million were used to partially refinance the aforementioned expenses in new business fields. As a result, EBITDA fell by just 6.9% to EUR 88.8 million in the third quarter (prior year: EUR 95.4 million).

* EBITDA and EBIT Jan.-Sept. 2009 without positive special items of EUR 50.2 million from sale of shares.

Segment development "Access" segment In the "Access" segment, sales in the first nine months of 2010 grew by 21.2% to EUR 913.0 million. Despite an extensive DSL quality drive and expenses incurred in the third quarter for the marketing launch of Mobile Internet products, EBITDA improved slightly (by 0.3%) on the same period last year to reach EUR 102.6 million. However, EBIT was down 16.9% on the same prior-year period to EUR 82.8 million, due to scheduled depreciation of EUR 16.2 million on the acquired freenet customer base.

The number of fee-based contracts in the Access segment grew by 50,000 contracts, from 3.50 million contracts as of December 31, 2009 to 3.55 million. Marketing focused on the growth areas of Mobile Internet and complete DSL packages. Accompanied by an extensive TV, print and online marketing campaign, the launch of new Mobile Internet products on July 1, 2010 was well received by the market. A total of 80,000 new customer contracts were concluded in this field during the third quarter. There was also strong growth in complete DSL contracts (of particular importance for United Internet), with the addition of a further 390,000 customer relationships (200,000 in the third quarter). However, the number of customer relationships for those business models gradually being phased out (narrowband, T-DSL and R-DSL) continued to fall. 420,000 customer relationships were lost or converted to complete DSL packages in the last nine months (of which 230,000 in the third quarter).

"Applications" segment In the "Applications" segment, significant investments were also made in customer growth during the first nine months of 2010. As a result, the number of fee-based contracts grew by 380,000 to 6.03 million. Although the statistics were pruned of 40,000 foreign contracts following a change in debt collection policy in the third quarter, there was growth of 35,000 contracts from the acquisition of the Mail.com brand. The number of ad-financed accounts around the world grew organically from 26.3 million to 27.3 million. Growth in this segment, however, has slowed since the contract conversion of a major customer of Sedo's subsidiary affilinet in late 2009. As a result, the listed subsidiary Sedo Holding AG (formerly AdLINK Internet Media AG) posted a fall in sales of 20.4% in the first nine months of 2010 - whereas the rest of the segment enjoyed growth of 12.1%. Against this backdrop, total segment sales grew by just 5.2% to EUR 495.5 million. Despite high development and pre-launch costs for new applications and further international expansion, as well as a significant increase in marketing expenses, EBITDA and EBIT in this segment grew by 6.3% to EUR 172.8 million, and by 5.3% to EUR 132.5 million, respectively.

The growth in customer contracts during the first nine months resulted from the addition of 200,000 new Business Applications contracts (total: 4.21 million) and 180,000 new Consumer Applications contracts (total: 1.82 million). The number of customer contracts in foreign markets (UK, France, USA, Spain, Austria, Switzerland) grew by 180,000 to 2.40 million contracts.

* In the third quarter of 2010, the statistics were pruned of 40,000 foreign contracts (change in debt collection policy), while there was growth of 35,000 contracts from the acquisition of the Mail.com brand.

Outlook
In view of the successful course of business so far this year, United Internet confirms its forecasts for 2010 and still expects consolidated sales to grow by around 15% (approx. EUR 1.9 billion total sales) and EBITDA to remain at the record level of the previous year (EUR 356.1 million without positive special items).

United Internet will continue to pursue its policy of sustainable growth in 2011. In order to utilize its wide range of opportunities, the company will once again invest heavily in new business fields in the coming year. In the "Access" segment, further growth is expected in the number of customer contracts, especially for products enabling mobile internet usage. In the "Applications" segment, the focus in 2011 will be on entering new foreign markets for Business Applications. In the field of Consumer Applications, United Internet will mainly drive the technical integration and subsequent expansion of its newly acquired Mail.com service. As Germany's leading email provider, the company also intends to make a strong entry into the field of legally secure email communication. The respective legislative procedure for the German "De-Mail" system is expected to be completed in the first quarter of 2011. Despite the high costs associated with these projects for sustainable growth in customer subscriptions, initial planning indicates that EBITDA in 2011 will reach a similar level to that of the current year.

back to overview