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Markets News

UPDATE 2-Norway's Adevinta returns to growth as markets recover

* Q3 revenue +1.6% y/y vs -16% y/y in Q2

* Core profit boosted by cost cuts

* “Exceptional” profit margin to fall as investment rebounds

* Worries over 2nd wave of pandemic

* On track to close eBay classifieds deal in Q1 2021 (Adds CEO quotes, background)

OSLO, Oct 27 (Reuters) - Norway’s Adevinta, which is in the process of taking over eBay’s online classifieds business, saw a rebound in third-quarter revenue and earnings as its markets gradually recovered from the coronavirus pandemic, it said on Tuesday.

Adevinta said online sites for autos and real estate led the recovery as lockdowns were lifted, but also warned that renewed restrictions on movements and general economic uncertainty could pose fresh challenges.

The Oslo-listed company’s July-September revenue rose 1.6% year-on-year to 183.3 million euros ($216.64 million), in line with a preliminary Oct. 19 statement and beating the 16% drop seen in the April-June quarter.

“This shows our business model is in demand ... and how important we are to car dealerships and real estate agents,” Chief Executive Rolv Erik Ryssdal told Reuters.

Still, growth still lags a long-term goal to expand by between 15% and 20% annually.

Adevinta in July agreed to buy eBay’s classified ads unit in a $9.2 billion cash and shares deal to form the world’s largest online classifieds group with a presence in 20 countries, aiming to close the transaction in early 2021.

Adevinta’s earnings before interest, tax, depreciation and amortization, including joint ventures, rose 6% to 57.1 million euros in the third quarter from 54.1 million euros a year ago, up from just 38.7 million in the second quarter.

Earnings were boosted by cost cuts during the pandemic, leading to an “exceptionally high” profit margin for the quarter, although this margin will erode as the company raises investments to boost growth, Adevinta said.

The second wave of COVID-19 across the northern hemisphere could also have a negative impact, while helping make online solutions the favoured option for the long term.

“We see an accelerated trend in the digital economy,” Ryssdal said.

Adevinta’s shares have risen 50% year-to-date, almost all in the wake of the eBay deal, sharply outperforming a 10% drop in Oslo’s benchmark stock index over the same period.

$1 = 0.8461 euros Reporting by Terje Solsvik, editing by Gwladys Fouche and David Evans

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