November 14, 2017 / 2:05 PM / 6 days ago

Scout24 targets faster growth after fixing property platform

* CEO targets revenue and profit growth in mid-teen percentages

* On lookout for real estate deal in the Netherlands

* Says Germany is in a “controlled, structural” property boom

By Douglas Busvine

FRANKFURT, Nov 14 (Reuters) - German online property and autos marketplace Scout24 is fixing glitches on its real estate platform and is on the lookout for acquisitions to boost revenue and profit growth, Chief Executive Greg Ellis told Reuters.

Scout24 last week reported third-quarter core profits from operating activities up nearly 8 percent, driven by a 27 percent increase at its AutoScout24 division, but its property site ImmobilienScout24 posted a gain of less than 4 percent.

Addressing inherited problems with the acquired property platform has delayed its growth push by about 18 months, Ellis said in a telephone interview.

“At ImmobilienScout24 we have been doing so much product, technical and business re-engineering during the past two years,” he said.

“Somewhere from 2019 to 2020 we’d be really wanting the group revenue (growth) to be up towards the mid-teens.”

Frankfurt-listed Scout24 competes with units of Axel Springer and eBay as real estate sale and rental markets increasingly move online, along with sales of new and used cars.

The company sees opportunities for an additional 20 billion euros ($23 billion) of business from activities including services such as financing.

STRUCTURAL BOOM

Scout24, with a market value of 3.6 billion euros, is part of Germany’s SDAX small-cap index but has an unusually high free float of 87 percent after strategic investors such as Deutsche Telekom sold their stakes.

It operates in five core markets -- Germany, Italy, Belgium, the Netherlands and Austria -- and has chunky core margins of more than 50 percent, enabling it to invest and pounce on opportunistic acquisitions.

Ellis, an Australian who joined Scout24 from REA Group in 2014, said he would be interested in a real-estate acquisition in the Netherlands after its recently acquired autos product became the market leader there.

“We certainly think we’ve got fill-in acquisitions ahead of us,” he said.

The company is testing analytics on its German autos platform, which would give users detailed guidance on whether a vehicle offers value for money based on parameters such as mileage, condition and other specifications.

“We’d like some of this stuff to become available progressively through 2018,” he said.

Ellis said the new car market Germany had taken a hit from the “Dieselgate” scandal in which manufacturers had been caught cheating on emissions tests, but the second-hand market has changed little in the past few years.

Germany’s real estate market, meanwhile, is in a “controlled, structural boom”, he said, helped by accelerating urbanisation and growing desire among Germans for owning their own homes rather than renting.

“You can borrow money in Germany at something from 1.5-2.5 percent fixed for 15 to 20 years, (so) it really doesn’t make sense to rent,” he said.

“Germans now understand that property is really affordable.” ($1 = 0.8576 euros) (Reporting by Douglas Busvine; Editing by David Goodman)

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