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

Rating action

Scope Ratings GmbH (Scope) has affirmed the BBB/Stable issuer rating on Schibsted ASA. Scope has also affirmed the 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 an average Scope-adjusted EBITDA margin of 17% in the last four years. Q1 2022 saw lower profitability against strong Q1 2021 comparables. This was primarily because of inflation in feed stock (mainly paper) and higher financing costs. For FY 2002, the Scope-adjusted EBITDA margin is projected to remain at the 2021 level, driven by the optimisation in digital marketplaces (major growth engine with EBITDA margins of above 40%) and the stable margins in news media (about 10%).

Schibsted’s activities are still focuses on the Nordic region. About 61% of revenues are generated in Norway, 34% in Sweden, and the rest in Finland and Denmark. This revenue dependency on 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 ASA. Lastly, this is in line with their stated goals of consolidating their market positions in the Nordics. In 2022 the company has strengthened their position in Denmark, with the acquisition of Denmark’s largest online marketplace for craft services, 3byggetilbud.dk.

Schibsted’s financial risk profile (assessed at BBB) ended 2021 slightly better than Scope had projected. This was mainly driven by the higher-than-projected Scope-adjusted EBITDA, as Scope-adjusted debt was NOK 900m higher than projected. At end-2021, the Scope-adjusted debt/EBITDA leverage ratio was 2.8x (against the projected 3.2x), driven by the eBay Classifieds acquisition. Scope expects the company to deleverage towards 2.0x in the medium term, based on the projection of lower discretionary capex and continued strong cash flows.

Scope also deems Schibsted’s financial policy to be conservative and therefore expects leverage to stay within the 1x-3x target. Also credit-positive is the additional financial flexibility through Schibsted’s shareholding in the separately listed Adevinta ASA. This continues to provide a considerable buffer (NOK 27bn), even after the company took a NOK 20bn impairment of this position in 2021, to reflect the current market value.

Liquidity is adequate. As at Q1 2022, internal cash (NOK 1.3bn) and undrawn bank facilities (NOK 3.1bn) are enough to cover short-term financial liabilities.

Outlook and rating-change drivers

The Stable Outlook reflects Scope’s expectation that Schibsted will i) continue its consolidation of the Nordic market but at a slower pace than in recent years; ii) extend its financial services portfolio; and iii) grow its digital media offering. Scope assumes the successful integration of recent acquisitions, with no impact on the rating. The Outlook also factors in Scope’s expectation that the company will maintain a prudent financial policy with credit metrics remaining consistent with the rating category.

A positive rating action could be warranted if Scope-adjusted debt/EBITDA reached 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 Scope-adjusted debt/EBITDA were to persist above 3x due to larger-than-anticipated debt-financed acquisitions.

Long-term and short-term debt ratings

As of June 2022, Schibsted has NOK 4.8bn of senior unsecured bonds outstanding. Senior unsecured debt has been affirmed at BBB, the same as the issuer rating, based on the negative pledge and pari-passu conditions.

Scope has affirmed the S-2 short-term rating based on the supportive internal and external sources of liquidity (e.g. access to credit facilities of NOK 3.1bn as at June 2022), 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, (General Corporate Rating Methodology, 6 July 2021), is available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
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-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at https://scoperatings.com/governance-and-policies/regulatory/eu-regulation. 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-governance/definitions-and-scales. 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://scoperatings.com/governance-and-policies/rating-governance/methodologies.
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 Outlook and the principal grounds on which the Credit Ratings and Outlook are based. Following that review, the Credit Ratings were not amended before being issued.

Regulatory disclosures
These Credit Ratings and Outlook are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlook are UK-endorsed.
Lead analyst: Michael-Marco Simonsen, Associate 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
© 2022 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.