Orkla Media has four main businesses: newspaper operations with related digital activities in Norway, Denmark and Poland and magazine operations in Norway and Sweden. The Group is also increasingly involved in the digital media sector in the Nordic countries and Germany, direct marketing operations and the newspaper sector in Lithuania and Ukraine.
The newspaper business in Norway consists of local newspapers with number 1 positions, which together represent a 15 % share of national circulation.
The Berlingske Group is the largest player on the Danish newspaper market, with market shares of
31 % of the daily and 42 % of the Sunday newspaper
market. Orkla is a leading player on the Polish newspaper market, with a market share of 19 %. Through its 50 % stake in Hjemmet Mortensen, Orkla Media is the biggest player on the Norwegian magazine market and the fourth biggest player on the Swedish market.
Operating revenues totalled NOK 8,677 million in 2005, equivalent to underlying1 growth of 4 %. Operating profit before amortisation was NOK 425 million, compared with NOK 371 million in 2004. The newspaper business in Denmark achieved significant profit growth, mainly due to a combination of the rise in advertising revenues and the implementation of cost reduction programmes. Newspapers in Poland also reported profit growth compared with 2004 due to higher advertising revenues. Despite the improvement in advertising revenues for Newspapers Norway, profit declined slightly in this area as a result of substantial investments in product development and innovation. Underlying profit growth for Magazines was on a par with 2004. There was a high level of activity in 2005 in connection with new launches and acquisitions. Direct Marketing reported a drop in profit, mainly due to a decline in new sales in Sweden.
Operating revenues showed underlying1 growth of 6 %. As in 2004, this was mainly due to the rise in advertising revenues and a higher level of activity in the fields of printing and distribution. Berlingske initiated a turnaround operation in 2001 which entailed the establishment of joint service centres, the implementation of efficiency improvement processes, increased focus on sales, and editorial focus on the newspapers’ readers. This turnaround operation continued to significantly boost profit growth in 2005. Advertising revenues increased by 10 %, compared with an increase of 9 % on the total market for paid newspapers (as of November 2005). There was a rise in advertising volume for text and classified advertisements. The improvement in advertising revenues for Berlingske Tidende was largely ascribable to the job market. The circulation of Berlingske’s newspapers declined. The decline was on a par with the total market on Sundays and marginally less than the total market on weekdays.
The good growth of Berlingske’s free newspapers continued in 2005, with Urban in particular delivering high growth rates. Berlingske’s other free newspapers are still developing positively, although competition intensified in 2005. The media houses, including Jydske Vestkysten and De Bergske Blade, which serve newspapers, radio and the Internet, continued to develop, with stronger focus on digital media. Jydske Vestkysten has completed a successful transition from broadsheet to tabloid format. Berlingske is intensifying its activities on the digital classified markets are intensified, and growth rates are still high.
Operating revenues showed underlying1 growth of 5 %, while profit declined slightly in comparison with 2004. The year’s performance reflected the rise in advertising revenues and, conversely, the rise in costs in connection with the stronger focus on product development and new initiatives. The advertising volume for Orkla Media’s Norwegian newspapers increased by 7 %. Circulation for Orkla Media’s newspapers in Norway, was down slightly but improved compared with the total market.
The launch of local neighbourhood newspapers in Oslo was intensified throughout the year and since January 2006 neighbourhood newspapers are distributed to all households in Oslo once a week. Mediasite has been established and further developed
as a sales organisation targeting the central advertising market and is one of the two largest collaborative
advertising systems in the country, with almost
1.5 million readers. Construction of a new printing plant in Ålesund to cover North-Western Norway is under way and will be completed in May 2006. The distribution business has been further developed by introducing electronic books for delivery staff and increasing the portfolio through Mediapost.
Improvement projects have been initiated to rationalise advertising production, customer services and editorial production for the local media houses.
Operating revenues showed underlying1 growth of 3 %, mainly due to the rise in advertising revenues, and operating profit grew accordingly.
There is still strong focus on product development, such as new product packages in connection with advertising sales and the development of joint supplements, sections and magazines/feature pages. More competition is anticipated from new launches on the Polish newspaper market, which will entail intensified marketing activities and product development. Circulation growth was still negative, but better than for the total market.
Underlying1 operating revenues were up 2 %, while profit was on a par with 2004. Competition on the magazine market increased significantly in 2005 and several new titles were launched. Hjemmet Mortensen strengthened its market position in the course of the year and generated new growth with the launch of the women’s magazine Kamille and the acquisition of Ditt Bryllup (Your Wedding) and Bo Bygg og Bolig (Living, Buildings and Homes). The latter titles represent an interesting new type of niche product which is a combination of magazine and catalogue.
HM Interaktiv was established as a new business area for Internet activities following the acquisition of three established Internet companies. The combination of these companies with Internet activities related to established magazines and the Doktor Online health service will provide a platform for an important new business area.
In order to facilitate innovation, product development and growth, the publishing units were reorganised in autumn 2005. The media business in Norway is now divided into five business areas: Family Magazines, News Magazines, Magazines, HM Specialised Media and HM Interaktiv.
The underlying1 decline in operating revenues was 6 % and profit fell in comparison with the previous year. The negative trend was due to lower revenues and ongoing restructuring in Sweden. In 2005 the Swedish organisation centralised its sales, production and IT operations and amalgamated its operational units into a single company. The Norwegian business achieved good sales growth but reoriented its activities towards products with a lower contribution margins. Efforts to create a common profile on the Scandinavian market and increase the focus on sales of advisory services will continue in 2006.
1 Excluding acquisitions, divestments and currency translation effects
Like its herbal namesake, camomile, Kamille magazine aims to energise and relax its readers
