Quarterly report first quarter 2003

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Overall position:

The demanding situation in the markets continues to make its mark on Group developments. Particularly the contracting advertisement markets are reducing turnover. By introducing a number of measures we succeeded in cutting costs by about 9 per cent as compared with last year. Operating expenses were reduced in most fields, from staff/support via the editorial desks to distribution and communication. All in all, the result before tax for the quarter was somewhat better than that of last year, and this is the third consecutive quarter with a moderate improvement of the operating result.

Dagens Næringsliv’s performance (in terms of profit/loss) has stabilised in the last quarters. All in all, sound progress has been made by the other companies, although they have been somewhat affected by developments in the exchange rates.

Publication by publication:

Dagens Næringsliv’s operating income dropped by about 11 per cent. This is a somewhat larger decline than was expected, and particularly in March there was a marked drop in advertising income. Circulation income for the quarter is also down somewhat. Costs have been cut by the same – 11 per cent, bringing the operating result to the same level as last year.

A number of measures have been carried out and more are underway to improve the operating result. In addition to the cost programmes there is a clear focus on improving sales results. However, there is still uncertainty as to how the market will develop.

The second quarter of last year was particularly poor due to strikes and the negative consequences that ensued. This, in combination with measures to cut costs and increase revenues, is the reason why an improvement is expected in the second quarter of this year. Moreover, the contract with Adresseavisen-Trykk a.s is now in operation for printing Dagens Næringsliv for the counties of Trøndelag and Møre og Romsdal.

TradeWinds’ turnover has dropped, which is primarily due to developments in USD exchange rates – where USD is down about 20 per cent. Trade Winds has captured market share as regards advertisements. There is also a slight fall in circulation. The operating result is weaker than it was at the same time last year, and there is uncertainty about the short term (profit) performance. Moreover, the SARS situation in China has caused the acceleration planned there to be postponed.

Upstream has also seen a fall in turnover, which is solely due to developments in the USD exchange rate. In dollars invoiced there is growth – particularly in advertisements. The trend in Europe and Asia has been particularly good. The operating result has improved through the introduction of a number of cost cuts, and orders from the US have increased solidly towards the second quarter. An improvement for Upstream is therefore expected in the second quarter.

For DN Nye Medier revenues increased by 23 per cent. This is basically due to increased advertising on the internet as a clear consequence of the internet being used more, and of several new advertisement products from dn.no. At the same time costs have been reduced by 24 per cent. A further improvement in the operating result is expected in the coming quarters.

Nautisk Forlag is experiencing a stable development. Shop turnover has dropped moderately, whereas there is an increase in sales to the merchant navy and to the fisheries sector. The operating result is expected to improve in the coming quarter.

TDN Nyhetsbyrå’s turnover and result are quite stable. This shows that TDN is winning market share in a contracting market.

Europower’s operating result has substantially improved by cutting costs. This improvement is expected to continue in the coming quarters. In March, Europower also published a quarterly paper directed at the power market. The newspaper was well received.

Intrafish Media still has a sound growth in turnover, but it is somewhat weaker than expected. It is particularly Fiskaren’s Norwegian advertisement markets that are weaker than expected. The global publications are experiencing a sound growth, with many new readers in the USA/Canada. The operating result is also somewhat weaker than was expected, primarily because of the advertisement situation for Fiskaren. The Norwegian-based publications will reduce costs in the months ahead as a result of the situation in the Norwegian fisheries industry.

In conclusion:

Cost cuts will continue and be intensified in some areas in the coming quarters. It ought to be possible to combine this with better publication results, through higher productivity and more purposeful work. The general business picture remains uncertain. USD trends will also have a negative impact. By and large, the Group is expecting the moderate improvement quarter by quarter to continue.

6 May 2003

The Board of AS Norges Handels og Sjøfartstidende