Online now generating 80 per cent of operating profit, says Norwegian newspaper group

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Schibsted , the Norway-based newspaper group, has reported that its online activities generated 80 per cent of its operating profit in a difficult third quarter.

Despite worsening economic conditions and fears of a global recession, the pan-European company, which operates in Spain, France, Norway, Sweden and the Baltics, saw the proportion of its operating profit from digital operations rise by 22 per cent.

Measured against the same period last year, the increase in digital revenue for the group, which has a dominant position in the online classifieds markets in Scandinavia and southern Europe, was 24 per cent.

However, its continued online success is in stark contrast with results from its print operations.

"The financial crisis has had a negative effect on the group's operating revenues. Developments have been particularly weak in the second half of September.

"Print classified ads have been especially affected," Schibsted said in its interim financial statement for Q3.

Both its French and Spanish freesheets, 20 Minutes, felt the negative impact of this: operating revenues for the Spanish free paper fell by 21 per cent, and by one per cent for its French counterpart.

The media company's print revenues also suffered from the sharp rise in paper prices, a development which has seen Schibsted's freesheet rival in France and Spain, Metro International, threaten to abandon its current newsprint supplier Norske Skog (Norwegian Forests) for Russian suppliers.

Overall, the Norwegian group made a Q3 operating profit of NOK 213 million EBITA (£19.4m), down from NOK 257 million (£23.4m), producing an operating margin of 6.7 per cent, down 1.4 per cent from Q3 2007.

The result lagged behind market forecasts of an operating profit on par with the same period last year.

Schibsted has vowed to cut costs to the tune of NOK 500 million (£45.5m) of the group operating profit (EBITA) in 2009. Bloomberg has reported that there will be 'significant job cuts' at the group, 'as the global credit crisis hurts classified ad sales'.