Ad hoc announcement acc. to Sec. 15 WpHG: United Internet: Decline in Online Marketing slows growth in 3rd quarter and dampens 2008 prospects. High writedowns on strategic investments.
Montabaur, November 13, 2008. The Management Board and Supervisory Board of United Internet AG today adopted the Group's consolidated results according to IFRS for the first nine months of 2008.
While the figures in our dominant Product segment (with our brands 1&1, GMX, WEB.DE, Fasthosts and InterNetX) rose strongly, sales and earnings in our Online marketing segment (AdLINK Media, affilinet and Sedo) were not satisfactory.
| 9-month comparison by segments in EUR million | 9 months 2007 | 9 months 2008 | Growth (%) |
|---|---|---|---|
| Product segment | |||
| Sales | 915.5 | 1,061.7 | + 16.0 |
| EBITDA | 204.4 | 235.8 | + 15.4 |
| Online marketing segment | |||
| Sales | 157.0 | 159.5 | + 1.6 |
| EBITDA* | 18.1 | 11.2 | - 38.1 |
* EBITDA without a positive special item in Q2/2007
Consolidated sales of United Internet AG grew by 13.9% in the first nine months of 2008, from EUR 1,073.1 million (comparable prior-year figure) to EUR 1,221.8 million. Adjusted for currency fluctuations, sales growth amounted to 15.7%. Earnings before interest, taxes, depreciation and amortization (EBITDA) grew by 14.1%, from EUR 218.7 million (comparable prior-year figure) to EUR 249.5 million. Due to the strategic investments in MSP Holding (freenet), Versatel and Drillisch, consolidated net income and earnings per share (EPS) were burdened by higher interest payments of around EUR 16 million and a negative net contribution to earnings from associated companies of EUR 8.3 million. Despite these negative effects, net income from ordinary activities improved by 22.1%, from EUR 108.2 million (comparable prior-year figure) to EUR 132.1 million. Earnings per share (EPS) from ordinary activities rose by 26.7%, from EUR 0.45 (comparable prior-year figure) to EUR 0.57.
The share prices of the strategic investments in freenet (via MSP Holding) and Drillisch have fallen strongly over the past few months. On the basis of stock market prices as of September 30, 2008, the Management Board and Supervisory Board have decided to write down the book values of these companies by a total of EUR 145.6 million. These non-recurring and non-cash effects resulted in net income of EUR -13.5 million and an EPS of EUR -0.06.
| 9-month comparison in EUR million | Jan.-Sep. 2007* | Jan.-Sep. 2008 | Growth (%) |
|---|---|---|---|
| Sales | 1,073.1 | 1,221.8 | + 13.9/+ 15.7 |
| EBITDA | 218.7 | 249.5 | + 14.1 |
| Net income (without writedowns) | 108.2 | 132.1 | + 22.1 |
| Net income (with writedowns) | 108.2 | -13.5 | - |
| EPS in EUR (without writedowns) | 0.45 | 0.57 | + 26.7 |
| EPS in EUR (with writedowns) | 0.45 | -0.06 | - |
* Results without positive special item in Q2/07
| Quarter comparison in EUR million | Q3 2007 | Q3 2008 | Growth (%) |
|---|---|---|---|
| Sales | 375.1 | 407.4 | + 8.6/+ 10.2 |
| EBITDA | 76.6 | 77.7 | + 1.4 |
| Net income (without writedowns) | 37.6 | 41.8 | + 11.2 |
| Net income (with writedowns) | 37.6 | -103.8 | - |
| EPS in EUR (without writedowns) | 0.16 | 0.18 | + 12.5 |
| EPS in EUR (with writedowns) | 0.16 | -0.45 | - |
The number of fee-based customer contracts grew to 7.83 million as of September 30, 2008 (31.12.2007: 7.15 million):
| Customer contracts in million | 31.12.2007 | 30.06.2008 | 30.09.2008* |
|---|---|---|---|
| Information Management | 1.21 | 1.30 | 1.35 |
| Webhosting | 3.21 | 3.51 | 3.57 |
| thereof abroad | 1.55 | 1.82 | 1.88 |
| Internet Access | 2.73 | 2.89 | 2.91 |
| thereof DSL | 2.59 | 2.76 | 2.78 |
| thereof resale DSL/T-DSL access | 2.48 | 2.39 | 2.22 |
| thereof all-inclusive packages | 0.11 | 0.37 | 0.56 |
| Total | 7.15 | 7.70 | 7.83 |
* DSL all-inclusive packages without prorated backlog of approx. 90,000 further orders.
Outlook: A total of approx. 180,000 new customer contracts are expected in the 4th quarter, of which approx. 60,000 in the company's DSL business. Falling demand in the Online Marketing segment (AdLINK), which began in the reporting quarter, is expected to continue. At the same time, marketing revenue from portals is growing at a more moderate pace than planned - approx. 20% sales growth is now expected in this field for 2008. As a result of these developments, growth of approx. 10% is forecast for operating business in 2008 as a whole: sales are expected to grow to approx. EUR 1,660 million (prior year: EUR 1,487.4 million) and EBITDA to approx. EUR 330 million (comparable prior-year figure: EUR 297.4 million).