Schibsted ASA

OSE:SCHA

Earnings Call Transcript

[Kristin Skogen Lund, CEO & Country Manager for Norway]

Okay. I guess we will get started. A very good morning to everybody. Since these are some times of extraordinary change at Schibsted, I will start out by giving you a general overview of what's happening in the group, and then I will go into the Q4 report, first for Schibsted. Rolv Erik will then go through the MPI part of that report. Then we will give you an update on the demerger process. And then finally, Trond, will round it off with some more financial figures. So this is the way we like to look at Schibsted, a group that is definitely well-positioned to continue its growth story. We have divided the group into 3 business areas, being Nordic Marketplaces, News Media and the Next, consisting of the financial services and as well as growth section. And these fit nicely together with the flow of both traffic and user data going between, and also, they help to pollinate new initiatives across all these different platforms. And of course, our future majority ownership of MPI will be a very important part of Schibsted also going forward. We like also to say that Schibsted is, in a way, divided in 3 layers. At the core of it all is our strong purpose in society, both as a reliable provider of news and information, but also a strong contributor to the circular economy, particularly from our marketplaces. Then we have the Schibsted group, which we like to be seen as a common foundation, which enables then, the businesses to thrive and to interact with each other, and I'll explain that a bit further, this idea about the foundation. But first, let's have a look at the new management team, which is now -- it's all been announced. And the logic here is that we have 3 executives then in charge of each of the business areas. And then we have 3 executives responsible for the different parts of this foundational layer, which you see in the orange there. And I can also add that the 2 new external recruits, Mette Krogsrud and Sven Thaulow, they will be both be starting up full time in mid-March. So we don't have to wait too much longer for them to be here. So the idea of this foundational layer then is to make sure that we do together what is smart to do together, either because it requires scale or because it requires specialization. And within finance, it's, of course, very important that we have a good system for efficient capital allocation as well as investment and cost discipline. When it comes to the people that I mentioned, we need to be the very best at attracting good talent and manage that talent, make sure we have competent employees that we have an entrepreneurial, fluid and collaborative organization and culture in Schibsted. And then last, but definitely not least, is an enhanced focus on data and technology. It's very important for us going forward that we have a strong capture and management of data, that we handle that data in a good and responsible way, but that we also manage to turn that into new value-creating activities for the group. And of course, also when it comes to technology, that we have the best possible infrastructure and that we share technology across where that makes sense. So Schibsted is, I would say, in a very good position to continue its growth story. We have a historical track record for being good at incubating growth businesses. We also have our share of failures along the way, but that has given very valuable learning. We have these 3 very strong business areas of the Nordic marketplaces, the digital media brands and the growth, especially within financial services. We have a proven financial performance. And now, I believe, also, we have a very solid team, both the new management team but not least all the good people working all across Schibsted. So this is a very good place to be to continue growth. And just a note on that, we see that we have various way of achieving that growth going forward. If we look at the green here, we need to develop, further our business within the core. We can keep organically build new businesses, Finn.no is our greatest example of achieving that. We are active in venture activities. We will explore merger and acquisition opportunities. And we also, of course, have the possibility of international expansion of different concepts, where currently Lendo is maybe the most valid example of that potential. And then I wanted just to say that, although we have will have a very, very strong growth focus going forward, obviously, most of our efforts will be put into growing our core business. We will also explore possibilities within adjacent businesses, and we will allocate some resources also to see if we can find entirely new business opportunities. So with that, I turn to the Q4. And it is nice to be able to say that it's -- Q4 was a record quarter, both in terms of revenue and a record-high EBITDA. We had very solid growth and margin expansion in Finn, a softer quarter in Blocket. We saw revenue growth combined with tight cost control within our News Media. And then we do see good continued growth for Lendo, but the growth rate has been lowered slightly partly due to regulations in Norway and also some -- we have some costs occurring because of international expansion. I'll come back to that. And then I wanted to show you specifically our price and product comparison site, Prisjakt, which is doing really well, and which saw an 18% growth in the full year of 2018. We will come back to the demerger process, but I can state that everything is on track and the listing is still planned for April 10. And we have -- the board yesterday decided that we will recommend a dividend of NOK 2 per share for the year of 2018. So then going into the individual businesses. So Finn had a very strong quarter rounding off a very strong year. 17% revenue growth in the last quarter, driven by growth in the job vertical of 30% and the real estate vertical of 28%. The growth comes from volume increase but also price optimization, and we've had some successful product enhancements both within jobs, real estate and cars that has helped to spur this growth. Display advertising is developing more on the soft side, but we do have an improved trend. And display advertising grew by 2% in the fourth quarter. We have some cost increase but still a healthy margin growth, partly that cost increase is due to an increase in marketing spend of some 50% in the quarter due to specific campaigns. If we then go to Sweden and to Blocket, we do see continued growth in jobs. We had a 6% growth in jobs in the fourth quarter that is somewhat lower than the full year number of 12%, and we believe that reflects the overall macro tendency in the Swedish market. When it comes to cars, the growth was 1%, so it's a slight revenue contraction, but it's a good news that we now have close to all car dealers back on the Blocket platform. When it comes to display advertising, there was a decline of 6% in the fourth quarter, but I would like to say that the negative trend seems now to level out, and we are quite optimistic that we have a good basis for returning to growth during the calendar year of 2019. We have onboarded a new CEO for Blocket, Pernilla Nissler, and we just now, last week, completed the acquisition of Qasa, which is an exciting acquisition for us. It's a full-service rental portal. And we have done a 3 months test with Qasa on the Blocket platform, and we see that Qasa almost doubled its revenue run rate during this test time. Qasa has an ARPU of SEK 4,500 compared to the Blocket ARPU of SEK 125. So if we managed to convert 20% of the Nordic marketplaces real estate rental ads, we actually have a potential to increase revenue on a yearly basis by SEK 300 million from this. And then before moving on, I would like to say that our -- before I go to the Publishing operations, I would like to mention Tori, which is our classified site in Finland, and we have a nice development there, solid revenue growth. And Tori had the great experience of 2018 being their first year, full year, as EBITDA positive. Okay. Then we are over -- whoops, it ran away from me there. Then we're over to the Publishing of what we now call News Media. And it was quite an exceptional both year and quarter for news media. Since I wasn't part of it, I can say that I'm quite impressed by these results. However, I don't think we can expect to see growth at these levels going forward. VG was certainly a strong contributor to this, with a revenue growth of 10%, Aftonbladet had a shortfall of 5%, while subscription -- the subscription papers were or businesses were flat in Q4. And the total numbers here is that digital grew by 9% while off-line in total declined by 1%. If we then go to VG, we see the revenue increase there of 10%. So the online revenues saw a growth of 20% in the fourth quarter. The orange bar indicating the off-line revenues were exactly flat at 0%. The strong growth in digital subscriptions, as you see, of 23% in absolute numbers made VG reach their target of 175,000 digital subscribers. This corresponds to a subscription revenue growth of 29%. And then you could ask how come there is a margin decline. Well, that has a very good explanation. The total cost in Q4 increased by NOK 45 million, NOK 25 million of that is due to a change in central cost allocations, NOK 10 million is due to a specific marketing campaign, the Bergen -- the Brexit campaign as some of you might have seen, and the remainder there is then increase in personnel. If we then go to Aftonbladet, we see that the development there is softer. Aftonbladet is hard hit in the print part with a decline of 14%, while their online revenues grew by 3%. But we do manage to almost keep up the margin due to tight cost control, and operating expenses were actually lowered by 4% in local currency in the quarter. If we then go to subscription. We see that there was a flat revenue development. Here also tight -- whoops, tight cost control of -- sorry. Whoops. It doesn't move. Well, I'll keep talking and [ you ] see if you fix it. Yes, a flat revenue -- oh, yes, well, you can't see it anymore now. Oh, thanks. And so on the off-line fell by 3% while online grew by 8%. And yes, like I said, tight cost control, minus 2% in the fourth quarter, meaning that we were able to even slightly then increase our margins. Okay. Then we come to Lendo. So Lendo continues with a very strong growth in Sweden. There was a 19% revenue increase in Sweden in the fourth quarter. However, there is an overall slowdown in the market, and that's particularly due to the regulatory initiatives now coming in Norway. This lowered revenue by 11% in the fourth quarter. But all indications tell us that we keep our market share, so this is more a macro phenomenon due to that change of regulation. But as you see, we do have reduced margins due to increased costs. 60% of that cost increase comes from marketing spend in existing markets, while 30% comes from international expansion. And when it comes to international expansion, we have now launched in Denmark in the last quarter, we are preparing for launch in Poland and Austria in this quarter. We have already soft launched there, and we are now exploring further possibilities for international expansion. And of course, this has -- comes with a cost. So we expect that this international effort will affect EBITDA negatively with somewhere between NOK 70 million and NOK 100 million for the full year. Here's my final slide and -- on this section, and that is of Prisjakt. Very impressive growth of 18%. Note that these are full year figures. Fourth quarter, in isolation, grew by 20%. And of course, this retail business is so that the fourth quarter is quite a -- makes up quite a substantial part of the full year revenue. The yearly result for Prisjakt was NOK 97 million, and that's actually more than double from what it was last year. The growth comes from a successful transfer of traffic over to the app, which gives better conversion than the web interface does and also some price changes and product optimization has taken place within Prisjakt. So with that, Rolv Erik, I give the word to you.

[Rolv Erik Ryssdal]

Thank you very much, Kristin. I'll be relatively brief. There are no big surprises for the MPI in this quarter. It was a good quarter delivered by our big sites. You can see especially France, Spain and Brazil, they're all showing good revenue growth and also a good development in the EBITDA margin. I'm particularly happy that the verticals: real estate, cars and the jobs, are growing well for all these sites. So the display advertising market has been tougher in Europe, but important in this is that the verticals, the main business, are growing well. And there is -- you can see also, as we've guided on earlier, it's a reduced investment phase spending leading, also, to a better EBITDA margin. We have, in Spain, bought out a minority, and now in the first quarter and have completed that. I think that's a good thing for all parties because we're now gathering all our activities in Spain, in Barcelona in a new building. And to have full control, simplifies the governance, especially when it comes to collaboration on product and tech. So we're happy to have -- see that completed. Then I would say that if I look in the first quarter, there's continued growth for the verticals, but there's also continued soft trend in display advertisements. So that market, the programmatic price level in Europe, has been somewhat depressed, and we're looking at ways to improve that. But we see that trend continuing into the first quarter. Then as Kristin commented on, we are on track with the plan for the separate listing in Oslo Stock Exchange on April 10. Looking into the main assets, you can see that, in France, good quarter again. Solid delivery by Leboncoin. Despite slow display advertisement, you can see that the main verticals again are delivering well. So we can see the biggest segment for us now is real estate. And we can see that the real estate agents, they really like that bundle we have created with -- between Leboncoin and A Vendre A Louer. That bundle, gives them more effect and enhanced products, has also allowed us to increase prices somewhat. Also in motor, there's a positive trend, and in jobs. Jobs is, of course, the smallest one, and we started relatively recently. I believe we are now the #3 in the French market. But it's relatively small, but it continues to grow well. And then the margins, as we've commented on, they will fluctuate somewhat from quarter to quarter. So you can see that Leboncoin, isolated, had very strong margin and that was -- but they were low on marketing spend in that quarter. Then they continue to improve their product. So the acquisition of Vide Dressing, that increases their footprint in the niche market for fashion goods. They also have interesting services for pickup and delivery and payment. So that's France. In Spain, we also had a good quarter and the one that -- the biggest development there is with -- is actually in cars. I think the car market in Spain is developing more and more. As you know, it's the guy who actually built up Fincars who's now in charge of Coches. And we believe there is more we can do there on the product side, and there's also more we can do when it comes to attracting especially a number of smaller dealers. And on the jobs, InfoJobs has had a good quarter again or a good year. And of course, the future development there is closely linked to the development for the total economy in Spain. But our position remains very strong as a very strong market leader. When it comes to real estate, we have those 2 sites that are working together, so Habitaclia and Fotocasa, and I think I see -- I'm pleased with the development or the combined development of these 2. Then again, the display advertisement revenue is hampers -- hampering us somewhat in both these countries, even in Italy. I commented on the minority buyout, that has been completed. All right. Let me touch briefly on the investment phase. This is, as we have guided on earlier, the total investment phase revenue increases but the losses are going down. And it's only actually Mexico and Shpock, which is somewhat now on a reduced -- which has a negative result. I'll get back to Brazil in a minute. But even Shpock is moving towards breakeven. So what we said previously when we did a -- last fall, when we did the new business plan, was that Shpock will concentrate more on monetizing their existing clients and then reduce the heavy marketing spend. And we said that during the final months of 2019, we expect them to be on a breakeven level, not on the full year basis but on a monthly basis towards the end of the year. When it comes to Brazil, I'm very happy with the development in Brazil. Yes, they're showing negative results this week -- this quarter. That's attributable to have a heavy marketing campaign and also a costs allocation over the last month over management incentive system. But what I'm enthusiastic about is what we're doing in the market there. And you can see there, there's a 55% growth. And of course, we're the clear market leader in motor, continuing to do well there. And then we are the #2 player in real estate, and we have recently started the jobs. What makes me excited about Brazil is, of course, that this is one of the largest countries in the world in terms of population and there's still so much to do in terms of developing the market. Since we have this strong engine very well-managed, I think that will be an exciting venture for us in years to come. Okay. Finally, let me just touch on the management group. You know that we have experienced managers in charge of our assets. Also when it comes to the functions in product and tech, and people and comms. And then we have a new hire, it was just announced last week, that's Uvashni Raman, who will join us as CFO in Barcelona, based in Barcelona, and she will join us during the month of March. She has she comes lately from Naspers, but has a wide experience from different industries, also handling IPOs. So I think that we're well on track then for the IPO that will take place in April. I think then I'll hand it back to you, Kristin.

[Kristin Skogen Lund, CEO & Country Manager for Norway]

Yes, so we just have a very few slides updating you on this. So the whole idea of the split is, of course, to be able to maximize value creation in both companies, both in Schibsted and MPI. We believe Schibsted has a, as I said, great opportunity now to be a digital growth company with focus on consumer services and the ability to create new winners and maybe even then internationalize and expand again in the future those concepts. And MPI is now very well positioned to be fast growing and a global leader within its segment. Here is the timeline, I think most of this is known to you. We have an Extraordinary General Assembly to approve the demerger plan on the 25th of February. We have Capital Markets Day in March 7. And as I said, the first day of trading is expected to be April 10. MPI, which soon will have a new name, by the way, it will be announced on the EGM, it will be listed on the Oslo Stock Exchange. Schibsted will retain a 60% ownership. I think this is well-known to you. There are no plans to raise capital through a stock issue in MPI. And around EUR 100 million of net interest-bearing debt in MPI where -- we have that at the year-end, and that includes the buyout of the Spanish minority, which is now completed. We just did that this quarter. And MPI will inherit the dual-share structure of Schibsted initially, but we will support the collapse of this into only one share class in due course. And MPI will, after its listing, operate as an independent company. MPI is uniquely positioned to participate in possible structural development in this industry. Schibsted will continue its long-term ownership, we will initially have 60%. But as we have already stated, we will be open to considering the option of reducing that shareholding and also become a nonmajority shareholder over time given the right circumstances and opportunities. And it is important for us to stress that we will support the development of MPI to the benefit of all shareholders, and maximizing the shareholder value for all MPI shareholders is also the overarching goal for our ownership. We will exercise that ownership through the shareholder meeting, and we will be represented on the MPI board. I, myself, will be -- or I am appointed -- or will be appointed to the board of MPI, as well also Terje Seljeseth, who represent The Tinius Trust. But the 4 other members are independent, and I'm very happy now to introduce to you the full composition of that board. Orla Noonan will chair the board. She is currently a board member of Schibsted, but she will not stand for reelection at our general assembly. So she will be considered independent after that. And then we have a new person on board, which is Sophie Javary. She is the Vice Chairman of Corporate Investment Banking at -- for the Europe, Middle East and Africa region at BNP Paribas. We have Peter Brooks-Johnson. He is the CEO of Rightmove, which is a U.K. real estate online service, the largest in the U.K. I mentioned, Terje. And then a new announcement today is Fernando Abril-Martorell. He is the Executive Chairman of the Indra Group, which is a large Spanish-based IT systems and services company, particularly known for its air traffic control and defense systems. So we are really pleased to have such a competent set of people, and we're very pleased with having been able to attract such senior European executives to join us in running the board of MPI going forward. Trond, then it's your turn.

[Trond Berger, CFO & Executive VP]

Thank you, Kristin. 2018 has been a great year and also, we ended Q4 with all-time high EBITDA, so that's something that we are really satisfied with. And if you look at the breakdown into the different units, you see that France, as Rolv Erik explained, continued the strong growth and especially, of course, in the verticals, which is most important. Also, if you look at Finn in Norway, it has been in the market for many years, continued to expand into both adjacent business and also developing the core verticals. So that's good. And then in Sweden, we are, I would say, not so pleased with what we have seen over the last quarters in, first of all, Blocket. But on the other hand, we're now back to a good basis for expanding further into both jobs and also regain some of the growth that we previously had in the motor segments. But it's hampered by the display. And then Spain, underlying good growth. And we had taken down investments that we guided for, so delivering on that. And then Publishing, again, very pleased with both subscription newspapers and also the VG especially, and slightly weaker in Sweden, of course. And then the Growth segment, Lendo, continued to do well especially in Sweden, and Prisjakt as well. So then, also, we have taken down some of the costs, so that's the record EBITDA for the fourth quarter. We just restate what we have said before that we're targeting a 15% to 20% top line growth medium term for MPI. And as, also, Rolv Erik said, the underlying verticals growing 20%. And also, we have seen a quite good revenue development. And also, we have a healthy mix, I would say, of products within the classifieds. And we regard both real estate and cars and jobs as resilient businesses going forward. 2018 has been a year that we have focused on increasing the EBITDA and cash flow and also taking down our CapEx. That is what we have delivered on. And you see here that we have good underlying growth in the EBITDA, quite strong increasing cash flow and then also taking down the CapEx. So that's a good mix for improving the financial position for Schibsted. If we look into more of the details in Q4, as I said, a record quarter on EBITDA. We have taken down an -- we have taken an impairment loss, first of all, in Chile. This is, obviously, a little bit technical accounting thing, because when we did the JV accounting back in 2017, we actually had to write up our 50% part. And now we're actually doing an impairment, which is more or less the same amount. So it's a little bit technical from an IFRS standpoint. The underlying development in Chile is quite good on traffic composition, so that's the most important thing. And then we also have taken a smaller impairment on Compricer in Sweden. So that gives an operating profit of 470 -- or NOK 75 million compared to NOK 479 million, but it's due to the impairment, first of all, in Chile. Schibsted board proposed NOK 2 per share. That will be proposed to the general assembly. So that is an increase of a stable dividend of NOK 1.75. And we also have some IFRS effects, IFRS 15 goes for revenue recognition. There is some slight effect on that, but not material for [ ships ] as such. IFRS 16, of course, much more important. That is something being implemented in Q1 this year and it has a group effect in Schibsted, the combined Schibsted, of NOK 450 million to NOK 500 million. And it's a split 70% Schibsted, 30% MPI roughly. So we will do, as most other companies, and start then to include that I think Q1, of course, but not restate '18 and previous years. So that's in line with our understanding or the practice in -- for most companies. The underlying tax rate is below 30%. And the tax rate, I would say, is also expected to go somewhat down going forward. And also in -- if you look at MPI, which will be a standalone. If you look at the cash cost for tax there, that is also something that we expect to continue down. Looking then at the MPI financials. You see that we have -- and this is combined for the new MPI, that we have -- I mean, we'll be -- of course, our marketplace operations outside the Nordics. And it's -- and top line growth of 16% and strong growth in EBITDA, and even stronger growth if we include the joint venture. And that's, first of all, Austria and Brazil. And as I said, it is a healthy and good mix into the main verticals in a position as such. And these are also information just to give you some full picture of the MPI financials and it's some of the same explanation as before. EBITDA EUR 151 million. Strong increase in cash flow, EUR 79.3 million. And then, also, CapEx about stable level. So I would like to remind you that we will have a Capital Markets Day, 7th of March. In that presentation there, we will go through, of course, Schibsted and MPI. And also, we will give then more details on the upcoming IPO and also targets for Schibsted and MPI going forward. So looking forward to that and I hope that most of you can attend that event. So then I give the word back to all of us and Q&A, for the Q&A session.

[Preben Rasch-Olsen]

Preben Rasch-Olsen, Carnegie. I have 3 questions. It should be rather simple, I think. But starting with Tori. Could you give us some numbers on Tori, revenue and EBITDA, and perhaps revenue growth in '18 versus '17?

[Trond Berger, CFO & Executive VP]

Well, I, first of all, we have not disclosed details of Tori yet. We will come back to that. Tori in -- is now in -- has gone into a positive territory in 2018 and it has a quite strong revenue growth. So -- but we will come back with more details on Tori specifically. But it's now in [ eventually ] a breakeven situation in 2018.

[Preben Rasch-Olsen]

And then going over to the MPI, a quick one on Spain. Could you split the revenue between InfoJobs and the other parts? And if not, could you say something about the growth in InfoJobs and anything?

[Rolv Erik Ryssdal]

Well, we haven't given the splits. What I said was the fastest grower was -- it was cars, and InfoJob was the second fastest, and then a little bit ahead of real estate. But they're all -- good double-digit growth for all of them.

[Preben Rasch-Olsen]

And lastly, I don't quite understand what's happened with the display advertising in Europe. Is classified losing market share or Schibsted? Or is it just general price pressure? And if so, why?

[Rolv Erik Ryssdal]

I think it's been a general price pressure, and I think that GDPR has also led to some disturbances. And then I think that the price level has gone down. And it seemed the -- it seems like the biggest companies, like Google and Facebook, have increased their market share somewhat.

[Unknown Executive]

Okay. While waiting for more question in the room, we can always take some from, of our viewers on the webcast. So there's one question on MPI, the M&A strategy, looking at the different developments in the industry with Trade Me, Skout, Avito, et cetera, different transactions. Can you please say anything about your ambitions?

[Rolv Erik Ryssdal]

Well, I think Kristin referred to you that the company is well positioned to take part of consolidation in the industry. And I think that we've also said that we want to expand in markets that we already are or doing bolt-on acquisitions. So I think we -- we're watching what's happening in the industry. We're now concentrating on the listing taking place in April 10th, and I think we'll be in an excellent position then to take part in further development in the industry.

[Unknown Executive]

Okay. There are a few questions on Lendo. First, are you able to give some medium-term indication on investment levels, beyond the NOK 70 million to NOK 100 million that is indicated for 2019? And yes, that's the main question.

[Kristin Skogen Lund, CEO & Country Manager for Norway]

Okay. Well, to that I would say that it will be actually a very important part of our strategy process, from now until midyear, deciding precisely how aggressively we shall pursue internationalization of Lendo. So it's premature to answer that question. It will depend upon the level of aggressiveness that we apply to that strategy.

[Unknown Analyst]

[Gladys Fisher] from Reuters. A follow-up question on display advertising, are you seeing increased competition from tech companies like Facebook?

[Rolv Erik Ryssdal]

Yes, I think what you've seen globally in Europe is that Facebook and Google have increased their total market share. That's right.

[Unknown Analyst]

So are you saying then -- so are they eating into your market share as well?

[Rolv Erik Ryssdal]

Well, I think you saw Google published numbers last week, and they had increased their revenues quite -- on advertising. And when they increase their market share, yes, it has been a pressure from the market share for the others. That's right. But we're looking into this and seeing how can we work even better with product development to differentiate ourselves from the more commoditized formats that they're having.

[Oliver Schüler Pisani, Analyst of Consumer Goods]

Oliver from Nordea. Just continuing on the topic of Lendo. So from all I've seen, you've never had any significant accumulated losses when entering a new market previously. Now you're entering 3 markets and are guiding for NOK 70 million to NOK 100 million in negative EBITDA impact for Lendo. So how do you think about approaching profitability in these new markets would be the first question. And secondly, did I understand you correctly that you are considering entering additional markets in addition to the ones you've announced previously for Lendo?

[Kristin Skogen Lund, CEO & Country Manager for Norway]

Well, like I said, it's something that we are currently evaluating. We haven't made a decision on further expansion yet, but it is something we will consider. We will come back to you when we have considered it. And when it comes to Lendo, the thing is that, that spend is mainly marketing spend, and we're going also into markets where we don't necessarily have the same media presence and synergies that we have in the Nordic market. So it does cost more in marketing when we go to new markets. But it's a very variable and easily adjustable spend. This is not, for example, lots of personnel and that type of more fixed cost. So it's a very calculated bet, what we do now, and we are quite optimistic and confident that we will able to turn those 3 countries into profitable businesses. If so is not the case, it's easy to pull out and take down the cost.

[Trond Berger, CFO & Executive VP]

Yes. And also, the expansion, of course, depend on the success that we see already. They're doing it stepwise, so that's something that is important being put to further expansion.

[Kristin Skogen Lund, CEO & Country Manager for Norway]

Yes.

[Oliver Schüler Pisani, Analyst of Consumer Goods]

And I think you've also discussed product development in Lendo previously. Do you see any scope for rolling that out in these new markets as well, Lendo for business...

[Kristin Skogen Lund, CEO & Country Manager for Norway]

Yes. Again, I think -- let's now test and see how this is coming along in Sweden. If we get good traction, I think it would be a good candidate to expand. But I mean, again, you need to have maybe a foothold in the consumer market first and then you can expand your offering as you go along. But we will closely evaluate business in Sweden now and maybe start out by rolling that to the other 2 Nordic markets before we take it further out.

[Unknown Executive]

Okay. We could have one more from the webcast. Corporate overhead cost, can you indicate anything on that? Will it continue to come down in 2019?

[Trond Berger, CFO & Executive VP]

Well, I mean, we -- what we have said is that as part of this spinning off MPI, MPI will certainly have headquarter costs themselves, so it will go some up. But the new MPI setup will be a slim setup in Barcelona, so you don't -- you shouldn't expect any significant increase. What we have indicated before is after around NOK 100 million extra in total cost for the group. And of course, for new Schibsted, it is likely to go slightly down.

[Unknown Executive]

Are you able to provide any tax rate guidance for 2019 and potentially for MPI in isolation as well?

[Trond Berger, CFO & Executive VP]

As I said, we expect tax rate to go further down, and it is due to that we have tax losses from heavy investments in many years that we now, over time, can also benefit. And that, of course, goes for the tax cost and not for IFRS reporting, that's a little bit different. But it's -- the most important is the cash cost that will continue to go down. And if you will get MPI, isolated, I think that it will also benefit from that. But also that, like France also have declared, that they will reduce the tax rate from 34%. It is, of course, also quite important for bringing the tax rate in the new MPI, motor tax cost maybe closer to 25%, not [ within ] too long.

[Unknown Executive]

A question on Publishing. The Publishing division performed better than you had expected in your 2018 guidance that you provided in October. Was this related to cost or revenue? And how should we think about the beat or the result development for 2019?

[Kristin Skogen Lund, CEO & Country Manager for Norway]

Well, I mean, Q4 was a strong quarter in terms of revenue, and I would say in combination with continued cost control. On the other hand, as I indicated, we did release quite some marketing spend in Q4 since we -- yes, we felt that was the right thing to do. I would say that our digital transformation has good traction. VG has actually reached now their milestone of NOK 1 billion turnover, with 55% of their revenues now stemming from the digital. And also Aftenposten and Bergens Tidende now are -- now have more digital than off-line subscriptions, which is quite impressive. So there is a lot of good underlying growth. But we cannot expect those same growth rates going forward. I think that would probably be too optimistic.

[Unknown Executive]

Brazil fell into losses in Q4. Can you say anything about your expectations for 2019?

[Rolv Erik Ryssdal]

Well, I said that they had the losses due to 2 specific reasons that I mentioned, and I don't expect them to occur at the same level. So I expect a positive contribution also on the result. The important thing that I mentioned, I'm very happy about is, of course, how much their top line is growing and what kind of market positions they take.

[Unknown Executive]

And then there's a question on the capital structure of Schibsted and with a potential of a sale of 5% of MPI. How would you think about your balance sheet and the use of that proceeds?

[Trond Berger, CFO & Executive VP]

Well, we will have Capital Markets Day, 7th of March. We will come back to, as we have said before, more details on financial targets. And that, of course, will cover also the Schibsted capital structure going forward.

[Unknown Executive]

One more here from the web. When you talk about the Lendo expansion cost for this year, is that focused on the 3 markets you talked about or potentially markets beyond that?

[Kristin Skogen Lund, CEO & Country Manager for Norway]

That is within existing plans, so that's Denmark, Austria and Poland.

[Rolv Erik Ryssdal]

All right. It seems like we answered most of the questions.

[Kristin Skogen Lund, CEO & Country Manager for Norway]

Good. Okay.

[Rolv Erik Ryssdal]

Okay.

[Kristin Skogen Lund, CEO & Country Manager for Norway]

Well, thank you very much, everybody.

[Rolv Erik Ryssdal]

Thanks.