SOURCE: LBI International AB (publ.)

October 22, 2009 04:03 ET

LBi - the global digital marketing and technology agency today announces its third quarter results 2009

Strategy and organisational redesign continue to pay off, margins advance towards pre-crisis levels

STOCKHOLM, SWEDEN--(Marketwire - October 22, 2009) -


Third quarter highlights

Net sales came in at EUR 33.8 million, in line with the second quarter 2009, impacted by seasonality effects in the Central and Southern Europe and Scandinavia.

Good sequential growth in adjusted EBITDA to EUR 4.8 million from the second quarter 2009, reflecting a strong adjusted E BITDA margin improvement from 13.1% to 14.2% as a result of more retained strategic engagements, effective organisational redesign and implemented cost efficiency measures.

Non recurring (non cash) goodwill (and intangibles) impairment charge of EUR 68.9 million as a result of economic downturn and consequently lower than expected performance of historic acquired entities, mainly the reversed merger of LB Icon and Framfab (all share deal) in 2006.

Including the (non cash) impairment charge earnings per share came in at EUR 1.11 negative.

Looking ahead

Consistent evidence in US and U K markets of strong inbound activity and new business.

Hesitant recovery in European markets, but signs that conditions are starting to improve with anticipated visible topline impact as of the first quarter of 2010.

Continued search for suitable acquisitions that extend service offering and drive sell opportunity.

Focus on strategic engagements, utilizing cross selling opportunities and increasing operating efficiencies aimed at building the full-service digital agency best equipped to serve global accounts.

Financial highlights


EUR million         Jul-    Apr-   Jul-    Change at  Jan-  Jan-  Change at
                    Sep     Jun    Sep     constant   Sep   Sep   constant
                    2009    2009   2008    rates*     2009  2008  rates*

Net sales           33.8    34.3   41.0    -15.1%    102.9  121.1   -13.2%
EBITDA               4.5     4.5    6.0                9.0   15.7
EBITDA adjusted**    4.8     4.5    6.0    -20.7%     13.1   14.3    -8.9
EBITDA margin
 adjusted**         14.2%   13.1%  14.7%              12.7%  11.8%
Impairment         -68.9       -      -              -68.9      -
EBIT               -66.7     2.8    4.1              -65.6    8.9
Net result         -68.3     2.2    3.0              -68.7    5.1
Earnings per share -1.11    0.04   0.05              -1.10   0.08

* Change rates reflects year-on-year comparisons, adjusted for exchange rate fluctuations

** January-September 2009 excludes EUR 4.1 million restructuring costs. January-September 2008 excludes a EUR 1.4 million non cash gain during Q 1 2008 on dissolvement of three dormant entitities in the Netherlands, whose businesses have been transferred to LBi Lost Boys. SEK are used as functional currency in the LBi Group and EBITDA margins and other growth measures are calculated from SEK.

A word from the CEO

As expected business has been picking up from the low levels we saw in the first half of 2009. In the third quarter we have therefore been able to further improve our operating performance. The organisational redesign and extended service offer implemented in the first quarter have helped us increase our EBITDA by 2.0% compared to the second quarter and by 25.9% compared to the first quarter 2009 at constant rates. As a consequence, our third quarter EBITDA margin improved from 13.1% in the second quarter to 14.2% in the third quarter, advancing back towards pre crisis levels.

The operating performance improvement recorded in the third quarter and over the course of the year illustrates the effectiveness of the restructuring and legitimises the increased focus on higher margin and retained strategic engagements. Therefore, we continue to prioritise relationships that deliver long term visibility, where we have the opportunity to manage the entire digital channel and thereby improve our quality of earnings. We believe that this strategy better positions us for long term sustainable top line growth as the market recovers.

In the most mature markets, the US and UK, we are seeing the benefits of this disciplined approach. In both these regions there is increasing evidence of improved sentiment and as a consequence of our strategy we are now driving significant improvement in both the top and bottom line. In the UK we saw a sound top line improvement of 2.6% compared to the second quarter and 12.7% compared to the first quarter of 2009 at constant rates, which we believe represented the bottom of the UK market for digital & advertising services. This growth in the UK specifically has been delivered as a consequence of our differentiated offer and the increasing trend to consolidate digital spend into the larger more mature full-service agencies. This also contributed to the strong EBITDA improvement of 12.5% compared to the second quarter and 28.6% compared to the first quarter 2009 at constant rates.

In the US we are seeing similar positive trends. The evolution of the integrated full service offer is however a little less mature in this market and as a result the top line has increased by 6.7% compared to the second quarter and by 13.1% compared to the first quarter of 2009 at constant rates. The revenue synergies achieved via the combination of LBi Special Ops Media and LBi Icon Nicholson, effective from 1 January 2010 are anticipated to accelerate topline growth next year. The strong EBITDA improvement of 31.3% compared to the second quarter and 75.0% compared to the first quarter 2009 at constant rate has been driven by both a rationalisation of the client portfolio and implementation of a cost reduction programme enabled by the combination of our NY operations.

In Central and Southern Europe and Scandinavia the story is country specific. Overall, the recovery is more hesitant with a lagging top line and margin development. In the third quarter, performance in these regions is typically impacted by seasonality and the high proportion of holiday entitlement in the period. However, the recent increase in the size of the weighted funnel suggests that conditions are starting to improve. In the fourth quarter we expect to further improve margins in these regions as a consequence of better cross selling and a reduced reliance on more expensive new business development. We do however not anticipate any meaningful improvement in the top line until the first quarter of 2010.

Obviously, the one-off impairment announced today which is mainly related to an all share transaction between LB Icon and Framfab back in 2006 at the height of the market, does not affect our cash position nor our financial flexibility. The current economic reality requires us to restate the goodwill to a more realistic level. We continue to have conversations with a number of companies that allow us to both futureproof and intelligently extend our global service proposition.

Luke Taylor, CEO

LBi Q3 2009

http://hugin.info/86897/R/1349349/325147.pdf

Contact Information

  • Contacts
    Luke T aylor
    CEO
    LBI International A B
    +44 20 7063 6465
    luke.taylor@lbi.com

    Huub Wezenberg
    CFO
    LBI International A B
    +31 20 460 4500
    huub.wezenberg@lbi.com

    Eva O ttosson
    Group Communications
    Manager
    LBI International A B
    +46 709 41 21 40
    eva.ottosson@lbi.com

    For more information, go to www.lbi.com
    LBi's head office:
    LBI International A B
    Company registration no. 556528-6886
    Hamngatan 2, SE-111 47 Stockholm, Sweden
    Phone: +46 8 41 00 10 00
    Fax: +46 8 411 65 95
    E -mail: info@lbi.com
    Web: www.lbi.com