The latest information on the rating, including rating reports and related methodologies, is available on this LINK.

Rating action

Scope Ratings GmbH (Scope) has assigned a first-time issuer rating of BBB/Stable to Norwegian company Schibsted ASA. Scope has also assigned a S-2 short-term rating and BBB senior unsecured debt rating.

Rating rationale

The corporate issuer rating reflects Schibsted’s business risk profile (assessed at BBB), supported by its market leadership in digital marketplaces and news media. Schibsted has a strong footprint in Scandinavia, which benefits from a portfolio of well-known brands in both online marketplaces and news media. In digital marketplaces (principally Finn, Blocket, Tori and Oikotie), the company is ranked first across most verticals (e.g. jobs, motor, real estate and generalist), with 977m monthly visits and about 80% weekly digital reach in Norway and Sweden. Its position in news media is supported by its ownership of Norway’s best-selling newspaper, VG, and other strong brands including Aftenposten and Bergends Tidende. In the past years, Schibsted has focused on not only expanding its online presence but also investing in new areas with good long-term growth prospects like financial services (Lendo and Prisjakt). Schibsted’s leading position in its core markets is credit-positive, supporting stability in revenues and thereby credit ratios. The stable profitability also supports the rating, with a Scope-adjusted EBITDA margin of 20% for the last twelve months to June 2021. This is the result of the company’s major growth engine over the past years, digital marketplaces, with EBITDA margins of above 40%, and the stable margins in news media (about 10%).

Schibsted activities are focused on the Nordic region. About 60% of revenues are generated in Norway, 37% in Sweden, and the rest in other parts of Europe. The revenue dependency in the Nordic region is balanced by that region’s economic strength and the digital savviness of its population along with Schibsted’s participation in other markets via associated company Adevinta. In addition, the company aims to consolidate its market position in Finland through Tori and Oikotie, which merged with Schibsted in 2020. Schibsted also intends to strengthen its position in Denmark and closed the acquisition of eBay Classified’s Danish operations (DBA.dk and bilbasen.dk) in the second quarter of 2021.

Schibsted’s financial risk profile (assessed at BBB) reflects its strong key credit ratios. These include the low leverage, as measured by a Scope-adjusted debt/EBITDA ratio of 2.2x as of December 2020, and positive free operating cash flow. While net financial debt to Q2 2021 increased following the eBay Classifieds Denmark acquisition (with the company drawing on a NOK 3.3bn bridge facility), Scope expects leverage to fall towards 2x from 2022 as operating cash flow is strengthened by the eBay acquisition and the Oikotie consolidation in Finland. Scope also deems Schibsted to pursue a conservative financial policy and therefore expects it to keep leverage within the 1x-3x target. Scope also notes positively the company’s additional financial flexibility through its shareholding in the separate listed Adevinta ASA.

Liquidity is adequate, supported by internal cash (NOK 0.7bn) and undrawn bank facilities (NOK 3.1bn), which easily cover short-term obligations of NOK 79m as of June 2021.

Outlook and rating-change drivers

The Stable Outlook reflects Scope’s expectation that Schibsted will i) continue its consolidation of the Nordic market; ii) extend its financial services portfolio; and iii) consolidate its distribution business. Scope assumes eBay Classifieds Denmark will be successfully merged, with no impact on the rating. The Outlook also factors in Scope’s expectation that the company will maintain a prudent financial policy consistent with the credit metrics required for the rating category.

A positive rating action could be warranted if the ratio of Scope-adjusted debt/EBITDA remains below 2x on a sustained basis, for instance, because of a focus on organic growth rather than M&A.

A negative rating action is possible if the ratio of Scope-adjusted debt/EBITDA increases persistently above 3x due to larger-than-anticipated debt-financed acquisitions.

Long-term and short-term debt ratings

Schibsted has issued senior unsecured debt of NOK 2.8bn as of June 2021. Senior unsecured debt is rated BBB, the same as the issuer rating.

Scope has assigned a S-2 short-term rating, based on supportive internal and external sources of liquidity (e.g. access to a credit facilities of NOK 3.1bn as at June 2021), positive cash flow generation, strong access to capital markets, and Schibsted’s long-term issuer credit rating.

Stress testing & cash flow analysis
No stress testing was performed. Scope Ratings performed its standard cash flow forecasting for the company.

Methodology
The methodology used for these Credit Ratings and/or Outlook, (Corporate Rating Methodology, 6 July 2021), is available on https://www.scoperatings.com/#!methodology/list.
Scope Ratings GmbH and Scope Ratings UK Limited apply the same methodologies/models and key rating assumptions for their credit rating services, while Scope Hamburg GmbH’s methodologies/models and key rating assumptions are different from those of Scope Ratings GmbH and Scope Ratings UK Limited.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on https://www.scoperatings.com/#!governance-and-policies/rating-scale. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://www.scoperatings.com/#governance-and-policies/regulatory-ESMA. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at https://www.scoperatings.com/#governance-and-policies/rating-scale. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on https://www.scoperatings.com/#!methodology/list.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting the Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlook and the principal grounds on which the Credit Ratings and/or Outlook are based. Following that review, the Credit Ratings were not amended before being issued.

Regulatory disclosures
These Credit Ratings and/or Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and/or Outlook are UK-endorsed.
Lead analyst: Rigel Scheller, Director
Person responsible for approval of the Credit Ratings: Henrik Blymke, Managing Director
The Credit Ratings/Outlook were first released by Scope Ratings on 23 August 2021.

Potential conflicts
See www.scoperatings.com under Governance & Policies/EU Regulation/Disclosures for a list of potential conflicts of interest related to the issuance of Credit Ratings.

Conditions of use/exclusion of liability
© 2021 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Analysis GmbH, Scope Investor Services GmbH, and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin.